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Friday’s Jobs Report: Reading the Tea Leaves

On Friday, we will get what may be the single most important monthly data release on the U.S. economy: the Employment Situation Report, also known as the jobs report. During a time when we have seen concerning economic signals, including last week’s GDP report, it will be telling whether the jobs numbers stay as strong as they have been.

Because this is such an important data release, a lot of effort is made to divine hints from other data sources. Ahead of the report, we get information from payroll processor ADP, survey information from the Institute for Supply Management (ISM), and data on layoffs from the Department of Labor.

So, what are the tea leaves saying for this month’s jobs report? Like much of the other economic data, the signals are somewhat mixed. According to ADP, private payrolls added about 155,000 jobs in April – a decent number but below recent monthly gains of around 200,000.

ISM surveys improved slightly, with the employment index from their manufacturing survey up to 49.2 from 48.1 in March, but still below the neutral 50 level. The nonmanufacturing survey, meanwhile, posted a 2.7 point gain to 53.0 from 50.3.

Finally, weekly initial claims for unemployment insurance ticked up slightly but remain near multi-decade lows.

“The job market remains crucial to economic expansion,” said Bob Hughes, senior research fellow at the American Institute for Economic Research. “The data suggest a solid report for April, but any big surprise, positive or negative, could have important implications for the economic storyline going forward.”

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