For the record, if one is not already getting prepared to clean the smoker, load the cooler, and prepare to smoke some quality dead pig meat or one’s brain, you might not be an American.
Then again, I live in Florida where we are expecting 4 to 7 inches of rain in the next 48 hours, so if you want to stand out there with some metal tongs in a lightning storm, be my guest.
This morning the the non-farm payroll report is coming out conveniently on a holiday and weirdly enough, projections are pretty tame. This great summary from LiveSquawk on X provides a great picture of the major estimates:
Believe it or not, yours truly, Mr. Contrarian does not believe we’re going to see a massive decline in the Bureau of Labor Statistics report.
I. Why NFP Remains Strong
Politics, politics, politics. President Donald Trump took the bull by the horns with this posting on his personal website:
In other words, until he would allow “bad economic news” for personal gain, there is no reason, especially heading into a widely broadcast major national holiday would he permit it. Love it, hate it, call me biased, whatever, but that’s just reality.
II. Historical Variations
In non-recession years, the worst that we see for June non-farm payrolls is flat to slight growth. But why is this historically true? Let’s review some seasonal factors.
1. The summertime part-time hiring surge in leisure and travel. Love it or hate it, it happens every year.
2. Layoffs are pretty tame for June due to seasonality thus hiring is only to fill positions vacated as necessary.
3. Despite the belief that that teenagers do not get summer jobs, they still get summer jobs. Granted they are temporary (lifeguard, servers, etc.) but they have happened as long as I’ve been alive. And that’s a long time even in cat years.
4. Initial data from the surveys is murky at best as many smaller business respondents are on vacation when the surveys are requested. Add in the lower survey participation rate now and estimates are often over average norms by the BLS statisticians.
III. Predictions
Non-Farm Payroll: + 133,000
U-3 Unemployment rate: Unchanged at 4.2%
Average Hourly Earnings: Unchanged at +0.4%
U-6 Unemployment rate: Unchanged at 7.8%
In other words a big beautiful boring unemployment report which leaves Federal Reserve policy unchanged. The average hourly earnings however is based more so on the Federal Reserve bank surveys in each district showing sticky to higher wage rates which not only is staglationary, but necessary to retain talent.
After the initial wild reactions in markets from 8:30 a.m. ET until 10 a.m., just look for algorithms and gamblers to have a good time during a holiday shortened session. The reality returns on Monday when Congress, Trump, and the trade war seizes the stage which is never a good thing for markets, stability, or one’s sanity.
Enjoy the show.
