Very Mixed Indicators For Unemployment & Jobs Data This Week

While many investors and traders are going to be out, we have two key events to watch this week.  The first is a hoped-for rate cut from the European Central Bank on Thursday.  Americans will then care about the employment situation perhaps more than anything.  The most recent economic readings are signaling the start or perhaps the verge of a recession hitting America.

What has been interesting is that the continually weakening employment reports of the last two or three months has just in the last week seemingly leveled off.  Despite the weakest ISM reading in three years, manufacturing employment held up.  Other data from the Chicago purchasing managers also showed an uptick in employment. It is too soon to call but the market could be facing an a report that ends up being ‘less bad’ than expected when the payrolls and unemployment data are due this Friday.

• If you are looking for which companies could directly be the most impacted, we would look for the human resources companies to move.  That leaves Paychex, Inc. (NASDAQ: PAYX) and Automatic Data Processing, Inc. (NASDAQ: ADP) on the payrolls services and Cintas Corporation (NASDAQ: CTAS) on the uniforms side of the equation.

There are several things to consider ahead of time.  Thursday will show a slew of economic data pertaining to jobs.  At 7:30 AM comes the Challenger job-cut report which will show how many cuts were made in June.  Then at 8;15 will be the ADP Employment report which aims to project the total number of private sector jobs created during the month of June and the expectation from Bloomberg is currently about 95,000 (with a range of 60,000 to 167,000).

The last look at government data will come from the Labor Department on Thursday via the weekly jobless claims.  Bloomberg has a target of 386,000 as of now which is the same pre-revision number seen a week earlier.  Bloomberg’s range from the economists so far is 375,000 to 395,000.

As of Monday, the Bloomberg consensus estimates for the official unemployment data are as follows:

• Non-Farm Payrolls exp. 90,000; range 35,000 to 167,000
• Private sector Payrolls exp. 100,000; range 45,000
• Unemployment exp. flat at 8.2%; range 8.1% to 8.3%
• Avg. hourly earnings up 0.2%
• Avg. work week 34.4 hours

JON C. OGG