NFP leading indicators: ISM Manufacturing PMI adds another positive signal for promising US jobs report
|- US ISM Manufacturing PMI employment sub-component rises from 52.4% to 53.7% in May.
- Our NFP leading indicators table shows all five figures already released in green, hinting a strong positive signal for Friday's US employment report.
The Non-Farm Payrolls is nearing and the outlook could rarely be more positive than what it looks right now. The United States Manufacturing PMI, released by the Institue for Management Supply (ISM), showed an employment sub-component of 53.7% in May, accumulating a rise of 1.3% from April's figure. Despite the full ISM Manufacturing PMI Index retracing a bit from 52.8 to 52.1, the survey shows that the manufacturing labor market looked good last month, which adds up to the recent trend of positive figures in the employment sector. Our NFP leading indicators table has all five numbers already released in green, with no negative figures yet to show:
Five more indicators are yet to come on Wednesday and Thursday before Friday's full employment report, but things are looking good in the US labor market, which could lead to strong numbers either in the headline Non-Farm Payrolls or in the Average Weekly Earnings figures.
Our fundamental analysis guide to trade the US jobs report classifies the US ISM Manufacturing PMI employment sub-component as one of the ten leading indicators that provide some hints of the status and trend of the labor market. According to our NFP crash course, "the index is expressed in percentage terms, and a higher reading means the majority of respondents’ comments indicate optimism about business conditions and the overall economy, a case for a strong NFP". Also, "some analysts suggest that the Manufacturing ISM has a closer relationship with payrolls, as jobs in this sector can be easier to measure".
Before the ISM Manufacturing PMI, the University of Michigan and the Conference Board Consumer Confidence indexes, the JOLTS Job Openings report and also the previous Non-Farm Payrolls all provided positive signals. Next Friday's US jobs report could be a big one.
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