Economy Watch: Which Way for Employment Growth?

Will the July U.S. employment report be another strong one?

Will the July U.S. employment report—which will be out on Friday from the Bureau of Labor Statistics—be another strong one, like in June (up 287,000), or as disappointing as May (up only 11,000)? It’s a fairly important report, coming so close to the election, and while the Federal Reserve is presumably watching closely the data ahead of an interest-rate decision.

On Wednesday, Automated Data Processing, in its monthly report on private-sector employment, posited an increase of 179,000 private jobs in July. That’s above expectations, but then again the ADP report hasn’t been very good for predicting BLS numbers in any given month. Even so, the report suggests employment growth somewhat above expectations.

Another positive employment metric from this week: Initial weekly unemployment claims averaged 256,000 in July, down from 267,000 in June, according to the BLS. That suggests a positive report ahead.

On the other hand, the most recent ISM manufacturing employment index decreased in June to 49.4 percent, pointing to some contraction in July in that sector, though the ADP report said that 4,000 manufacturing jobs were added in July. As for the ISM non-manufacturing employment index, that dropped in July to 52.7 percent, which still points to expansion, just not as much, for that sector.