NFP leading indicators: Stalled hard data negates positive signal for US jobs report

• NFP leading indicators table is mixed again, with the positive US labor market trend showing some signs of exhaustion.
• Dismal ADP Employment report leads negative signals provided by hard data indicators.
• Business and consumer sentiment surveys show optimism signals, but will it translate into a good US jobs report?

Things have been looking good in the US labor market for a while now, but the positive employment trend in the United States economy could be halted tomorrow, when May's US jobs report will be released. Despite a dismal report in February, the US economy has mostly been adding jobs comfortably above the 180k average consensus mark for the last eight months, bringing the Unemployment Rate down to record lows and pushing up the wages to above 3% year-over-year rises. 

The leading indicators for the Non-Farm Payrolls report in the past month have provided mixed signals, with the consumer and business surveys all showing positive signs for the labor market but the hard data has disappointed, with the ADP report, the Jobless Claims and the Job Cuts all showing worse-than-expected figures. 

That completes an NFP leading indicators table with a mixed balance of positive and negative signals, but where the usually more correlated-to-NFP hard data bringing plenty of red, while the also indicative but less reliable as a short-term predictor soft data provided by businesses and consumers in surveys being rather positive.

Our bias when reading this mixed table is slightly negative, as hard data is showing some signs of stagnation after months of a very good performance. The ADP Employment private report, considered by our Non-Farm Payrolls guide as "the harbinger of the NFP, because of the existent correlation between the two", released a very poor 27k job addition, a multi-year low. Both the Initial and Continuing Jobless Claims, which share weekly releases, have stalled around 220k and 1.6M each one, levels that are around the lowest in the last decade but which seem to be setting a bottom as their downtrend stops. The Challenger Job Cuts indicator also adds some force to these negative signals, as the corporate layoffs have jumped from around 40k to over 57k in the last month, which might put even more pressure to the creation of new jobs to deliver a strong number in the NFP.

That said, we can't dismiss the optimism showed in both (UMich and CB) Consumer Confidence indexes and also both the Manufacturing and Non-Manufacturing PMI employment indexes, which still show upbeat consumer and corporate mood about the labor market after a couple of down months in February and March. Will this translate into actual figures of job creation, wages and unemployment rate tomorrow?