The Labor Department’s Employment Situation report is due out this Friday. The investing community will get to find out whether they should have sold in May and gone away. This will be the last official government unemployment report ahead of summer, as it covers the month of May.

On Wednesday and Thursday we also will get to see many pre-employment reports that will shape the expectations as well. They come from ADP, Challenger, the weekly jobless claims and more.

As for the big official report on Friday, Bloomberg has estimates as follows:

• Unemployment: 7.5%, same as in April
• Non-farm Payrolls: 167,000 versus 165,000 in April
• Private-Sector Payrolls: 178,000 versus 176,000 in April
• Average Hourly Earnings: +0.2%, same as in April
• Average Work Week: 34.5 hours versus 34.4 in April

We already saw this week that despite a weaker-than-expected ISM manufacturing report, there was still some positive data in the employment side of the equation. This also follows sharply higher consumer confidence reports from last week. The first such pre-employment preview will come from ADP on Wednesday morning. Bloomberg has estimated that ADP will report 171,000 payrolls added in May, versus only 119,000 in April.

Another report on Wednesday will be on non-farm productivity and unit labor costs. While we focus heavily on worker productivity, this is a reading that is for the first quarter. It should have no bearing at all on the unemployment reading estimates, unless something is very unexpected here.

The Fed’s Beige Book is also coming out Wednesday afternoon. This gives more Federal Reserve insight around quantitative easing (QE), but it is also backward looking. We expect this to have no impact on unemployment estimates, even though traders will of course see if there is any more revelation over how QE’s exit may take place.

On Thursday morning we get to see the Challenger job cuts report. This will be right before the Labor Department’s weekly jobless claims data. The Challenger data is more for observation, but the weekly claims and the continuing claims will be the last bit of official Labor Department data before Friday’s big release.

One thing that has been noticed of late is that the regional data is mixed, but employment seems to be continuing to post modest gains. This May report is also the first one that shows the university graduating class of 2013 what their summer job hunting prospects will be.

Our take is that the modest gains expected in payrolls might be a tad too conservative, but not drastically too conservative. We also would point out that bad news might even be considered to be good news, because it keeps the Federal Reserve in the quantitative easing game of asset buying for that much longer. The most obvious focus remains on what QE tapering will come ahead.

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