The prospects for stronger economic growth in the second-quarter remain in flux, but the latest numbers move the dial a bit deeper into positive territory. The change is far from decisive, but it’s enough to suggest that momentum may be building for a stronger run of economic reports in the weeks ahead.
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● US jobless claims stay low, drop 8,000 to 276,000 | MarketWatch
● Weak US productivity, rising labor costs stir inflation concern | Reuters
● US Consumer Comfort Index falls to 6-month low | Bloomberg
● German Factory Orders Rise for Second Straight Month | NY Times
● Bundesbank Substantially Raises Germany Growth Forecasts | MNI
● Eurozone retail PMI in May signals strongest rise in sales since 2011 | Markit
● Greece Defers IMF Payment as Merkel Says Resolution Far Away | Bloomberg

Private nonfarm payrolls in the US are projected to increase by 178,000 (seasonally adjusted) in tomorrow’s update for May from the Labor Department, based on The Capital Spectator’s median point forecast for several econometric estimates. The prediction reflects a moderately lower gain vs. the 213,000 increase in April.
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Recession talk is fast and loose these days, but a fair amount of the chattering on this topic is anecdotal. Fortunately, there are a number of superior (i.e, relatively objective) metrics to consider based on hard data and robust modeling, including one technique that shows up regularly on The Capital Spectator (see last month’s update). But even if you’re adhering to best practices, there’s still the problem of a time lag. In some cases, we have to wait a month or two before we see fresh figures for a given indicator, which is usually reflecting some period in recent history. There’s also the matter of revisions to consider. Signals can change as updates for previously released numbers are published. One way to bridge the gap is with market data, which are available in real-time and immune to revisions.
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● US firms add 201,000 jobs in May, ADP says | LA Times
● US trade deficit drops sharply to $40.9B in April | USA Today
● US Job Creation Index Edges Up to New High in May | Gallup
● U.S. Service Sector Grows At Slowest Rate In Over A Year In May: ISM | RTT
● US service sector activity growth slows in May: PMI | Markit
● Global employment rises at quickest pace since end of 2007: PMI | Markit

US companies added 201,000 to payrolls in May, according to the ADP National Employment Report. The gain represents a solid improvement over April’s 165,000 advance. Although economic growth remains modest, today’s update suggests that recession risk remains low for the US. Today’s release also strengthens the view that Friday’s official jobs report from Washington will deliver upbeat numbers.
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The expected risk premium for the Global Market Index (GMI) inched higher in May, rising for the first time in four months. GMI — an unmanaged, market-value weighted mix of the major asset classes — is projected to earn an annualized 3.9% over the “risk-free” rate in the long term. (For details on the equilibrium-based methodology that’s used to generate the forecasts each month, see the summary below). Today’s updated estimate, which is based on data through the close of last month, increased 20 basis points from the previous projection.
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● US May auto sales race to strongest pace in nearly a decade | Reuters
● US factory orders fall for eighth time in nine months In April | MarketWatch
● OECD Cuts Global Growth Outlook as Investment Lags | Bloomberg
● Eurozone Growth Ticks Lower In May: PMI Composite Index | Markit
● German yields extend rise on inflation, Greek prospects | Reuters
● China’s service providers see sharpest rise in new orders for 3 years: PMI | Markit

Private nonfarm payrolls in the US are projected to increase by 167,000 (seasonally adjusted) in tomorrow’s May update of the ADP Employment Report, based on The Capital Spectator’s median point forecast for several econometric estimates. The median projection represents a fractionally lesser increase vs. April’s rise.
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Judging by the comments of several high-profile perma bears, the US economy should be in recession any day now. But the Treasury market seems to be reading a different script.
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