I know I keep coming back to the jobs picture for Americans, but let’s face it—if there is one issue that the 2012 Presidential Election hinges on, it’s jobs creation. That’s exactly why, on the eve of tomorrow’s big payroll report, I want to discuss the latest news on the U.S. labor market.
Today brought two very strong reports on the jobs front—first was the weekly report on initial claims for unemployment. To sum it up, last week’s jobless claims decreased by 12,000, or 3.1%, to 365,000. This came below the 375,000 consensus estimate, and far below the 400,000 cutoff—as I mentioned earlier, anything higher than 400,000 represents a contraction. Thanks to this lower reading, the four-week moving average remained constant at 371,250.
But what really got the markets going today (in addition to the European Central Bank’s bond buyout plan) was the August payroll report published by ADP Employer Services. According to ADP, private employers created 201,000 jobs in August. This was an uptick from July’s 173,000 jobs created and also blew the 140,000 consensus estimate out of the water.
All-in-all, this bodes well for tomorrow’s Unemployment Rate report. To put it into perspective, economists expect that a measly 155,000 nonfarm private payrolls were added in August. But the past 18 or so months’ worth of data have shown that the two payroll figures tend to follow a similar trend, so tomorrow’s Unemployment Rate report may end up topping expectations.
And a strong Unemployment Rate report is exactly what we need to finish out this week on a high note. Already the S&P 500 hit a four-year high today and the Nasdaq hit an eight-year high! So after you’ve had your morning coffee tomorrow, I want you to check back in on this blog because I’ll have an update ready for you as soon as the news hits the stands.