Monday is a holiday in the US but the remaining four days are packed with economic data. There won't be much to distract from the upcoming May data on employment and payrolls, but the numbers will round out what is known about conditions in the second quarter to-date. The median estimate for May non-farm payrolls is around up 200,000. This is roughly between the performance for the first quarter average (+175,000 a month) and the April increase (+244,000). The expectation for the unemployment rate is at 8.9%, down one-tenth from April. The outlook for the labour market remains on a sustained path of modest improvement. The May report on Friday should confirm this. Leading up to the employment data will be a few other labour market indicators, the most important of which is likely to be the ADP National Employment Report on Wednesday. The readings for the last three months have shown a fairly good correspondence to the actual payroll data. If the May numbers point to another steady rise, it will confirm expectations for the Friday BLS data. Also on Wednesday, the Challenger report on layoff intentions in May should offer some evidence about the health of the labour market. Layoff activity has been quite low in recent months, and should remain so for now. While job growth remains sluggish, job losses have stabilized. Initial jobless claims on Thursday could well remain elevated. Severe weather has plagued the Midwest with widespread flooding and a series of tornados that caused pockets of destruction. It may take a few weeks for the full extent of impact on new filings to be seen.
The ISM will release its indexes for manufacturing and non-manufacturing on Wednesday and Friday, respectively. Regional data suggests that there has been some slowing in the factory sector in May, in part related to shortages in the supply chain and also due to severe weather conditions that have hindered deliveries. Services are likely to feel the pinch less, but consumers and business have been expressing less confidence, and therefore are likely to limit demand in the non-manufacturing sector. However, expansion should continue in new orders, and employment to make modest gains. Other indicators for manufacturing and services scheduled for release during the week are...Read more