ADP report well below consensus. Today’s Automatic Data Processing (ADP) employment report showed U.S. companies hired 27K workers in May, well below consensus estimates for a 185k increase and the prior reading of 271k. Even though the ADP Employment reports can be volatile from month to month, a poor ADP report is typically not an encouraging sign for the May nonfarm payrolls report, which is scheduled to be released Friday morning. Overall, U.S. hiring has been strong this year with job growth averaging 205k in the first four months of the year. Even if we see a weak May nonfarm payrolls figure, we believe the labor market remains healthy as evidenced by a 49 year low in the unemployment rate, healthy wage growth, and a recent tick up in the labor force participation rate.
World Bank cut its global growth forecast. Citing a slowdown in trade activity, renewed financial stress, and sharper-than-expected slowdowns in several major economies, the World Bank lowered its global growth forecast to 2.6% in 2019 and 2.7% in 2020. The primary factor was the Euro Area, while Japan was revised down marginally, and the U.S. outlook was left unchanged. While the slowdown has likely already been priced in by the market, we view the weakness as temporary and believe growth will stabilize once headwinds such as trade uncertainty subside.
Big up day. The S&P 500 Index gained 2.1% yesterday, for its second best day of the year and best day during the month of June since 2012. Be aware though, the largest gains tend to take place with the S&P 500 beneath its 200-day moving average. In fact, since 1950, 19 of the largest 20 1-day gains for the S&P 500 took place beneath the 200-day moving average. Additionally, the S&P 500 is now down 4 weeks in a row for the first time since October 2014. Since the bull market started in March 2009, this has happened only 5 other times. The good news? A month later the S&P 500 was higher 4 times, with an average gain of 6.7%. We will take a closer look at this phenomena later today on the LPL Research blog.
NEW Market Signals podcast. Listen to this week’s podcast, in which Senior Market Strategist Ryan Detrick and Equity Strategist & Portfolio Manager Jeffrey Buchbinder discuss the U.S’s longest cycle of economic growth and the effects its expanding trade wars have on the global economy. Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts!
- ADP Employment Report (May)
- Markit US Services PMI (May)
- ISM Non-Manufacturing Index (May)
- Federal Reserve Beige Book (June)
- Eurozone PPI Report (Apr)
- Eurozone Retail Sales (Apr)
- Nonfarm Productivity (QoQ Q1)
- Initial Jobless Claims (June 1)
- Eurozone Employment (Q1)
- Eurozone GDP Report (Q1)
- European Central Bank Rate Decision (June)
- Nonfarm Payrolls Report (May)
- Unemployment Rate (May)
- Average Hourly Earnings (YoY May)
- Japan Leading Index (Preliminary Apr)
- Germany Industrial Production (Apr)
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