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Before the opening bell on Thursday, we see a lot of things for the economic mill: the new ADP (ADP – Free Report) the private sector wage bill, productivity and labor cost updates and, like most Thursday mornings, new initial and ongoing unemployment claims. These releases are ahead of the very important report of the Bureau of Labor Statistics (BLS), due out tomorrow.
From the last ADP survey for AugustPrivate sector jobs increased by 163K for the month. This is a bit below expectations, but still about double the "needed" jobs to compensate new retirees each month. The July title was revised down to 217K by 2000 jobs, but these numbers are not to be stifled. In fact, they continue to say that we currently have solid jobs in the United States.
Services, of course, outperformed products – 139K to 24K – but the 19K new jobs in the manufacturing industry remained strong, which has been the hallmark of the Trump economy so far. According to the standard, jobs in the education and health care sector were at the top of the list with 31,000 new jobs, followed by the leisure / hospitality sector at 25,000 and Trade / Transportation at 21,000. is interesting in that we do not yet see a significant decline in employment for companies that are expected to feel the effects of the tensions associated with the trade war.
Medium-sized firms (between 50 and 499 employees) experienced the largest growth with 111,000 new jobs last month. Small businesses, on the other hand, have reduced 21,000 positions – presumably because of the difficulty of hiring enough skilled employees – which we have heard about for months – and large companies have provided 31,000 new positions. Mid-sized companies outperformed the other two designations in the last two years, but last month they were even heavier.
The title of tomorrow's BLS – including new jobs in the private and public sectors – is expected to be around 190,000, which has been the standard for several months, and unemployment stands at 3.8 %. The number of the ADP being a little clearer, we may see downward revisions before tomorrow morning, although we do not expect much importance here. ADP and BLS are not often in real time, but compared to later revisions, we tend to see their results aligned.
Initial jobless claims are reduced to almost 200K
Clearly, in a low range deemed impossible to reach (or at least unsustainable) only a few years ago, weekly unemployment claims continue to reach levels below those observed about half a century ago. The 203K last week is the lowest weekly result since December 1969 (this survey began in 1967). The 213K of the previous week did not offer any revision this morning.
Continuing complaints also dropped: to $ 1.707 million from $ 1.71 million the previous week – again as a title that all of us will likely remember in weekly unemployment statistics. Can initial claims be less than 200,000 and continue to reach less than 1.7 million next week?
Productivity and labor costs are also stellar
Finally, non-agricultural productivity grew by 2.9% in the second quarter of 2018 in the middle of the month. Production increased by 5% and hours worked also increased by 2%. This is another BLS report, which will help analysts protect themselves from what they expect to see in non-farm wages tomorrow. Manufacturing industry grew 1.5% in the second quarter, which could help boost employment for the month of August.
Unit labor costs decreased by 1%, compared with -0.9% in the middle of the month. This could also be reflected in tomorrow's report on wage growth, which was the only significant negative point of the recent, historically strong national labor market. On the economic front, productivity is increasing and costs are undeniably decreasing. These types of readings will also prevent the Fed from raising interest rates too aggressively. But the American workforce is still struggling with market players, which is likely to continue at least until tomorrow.
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