NFP leading indicators: ISM Manufacturing PMI hints positive sign for Friday's US jobs report

US ISM Manufacturing PMI employment sub-component rises from 53.7% to 54.5% in May.
Our NFP leading indicators table shows a mixed picture ahead of the highly-NFP-correlated Wednesday hard data releases.

Jordi Martínez FXStreet

The employment picture in the United States turns a bit greener in the manufacturing sector, according to the Employment Index in the Institute for Supply Management survey for the month of June. The ISM Manufacturing PMI shows a continuously improving picture in the labor market, as the Employment Index surged from 53.7% to 54.5%, the second month in a row with a positive outcome. The full Manufacturing PMI declined just a tad from 52.1 to 51.7 but still performed better than expectations, as it was forecasted to fall down to 51.0.

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".

US jobs report pre-release checklist – JuL 5th, 2019

Previous Non-Farm Payrolls	Negative	Disappointing report with just 75k jobs added and negative revisions for prior months
Challenger Job Cuts	-	To be published on Wednesday July 3rd at 12.30 GMT
Initial Jobless Claims	-	To be published on Wednesday July 3rd at 12.30 GMT
Continuing Jobless Claims	-	To be published on Wednesday July 3rd at 12.30 GMT
ISM Non-Manufacturing PMI	-	To be published on Wednesday July 3rd at 14 GMT
ISM Manufacturing PMI	Positive	The Employment sub-index in the Manufacturing PMI grew 0.8% in June, from 53.7% to 54.5%.
University of Michigan Consumer Confidence Index	Neutral	UMich Consumer Confidence retraced a bit from last month's decade-highs, but still sitting comfortably on the high-end of a long-term uptrend.
Conference Board Consumer Confidence Index	Negative	The Conference Board Consumer Confidence stumbled last month, falling by 13 points to just above the 120 level seen in January during the last US government shutdown.
ADP Employment Report	-	To be published on Wednesday July 3rd at 12.15 GMT
JOLTS Job Openings	Positive	Job openings stayed at 7.5M in April, still very close to the multiyear highs seen earlier in the year.

Five more indicators, with the better-correlated-to-NFP ADP Employment Report and Jobless Claims among them, are yet to be released on Wednesday before Friday's full employment report, so there's still plenty of inputs to get on the NFP Leading Indicators table. As of now, the picture looks quite mixed, with this Manufacturing PMI survey being the most positive signal with the healthy numbers shown in the JOLTS Job Openings. The University of Michigan Consumer Confidence is also doing alright, just retracing a bit from multi-year highs.

On the other hand, the dismal jobs report from last month and the very disappointing Conference Board Consumer Confidence released last week add some negative signs to the picture.

Author

Jordi Martínez

FXStreet

Jordi Martínez is the Editor in Chief at FXStreet, leading editorial operations at the company, before being promoted to the role in 2023, he worked in several editorial positions at FXStreet, including roles as Senior Editor and

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