Don't Be Fooled On Friday

This Friday the government will report nonfarm payrolls for June. But, don't be fooled! The employment report is expected to show the U.S. shed 115,000 jobs last month. That is correct, we lost jobs last month. However, this reflects the shedding of roughly 250,000 temporary census hires. The key to the employment report is private-sector payrolls, not the headline number. Analysts expect private payrolls will rise about 125,000 in June, better than the paltry 41,000 counted in May. We all remember the May payrolls report was a major disappointment to the markets and helped kickstart a global selloff in equities Many economists point to strong capital spending and growth in working hours as a sign the labor market is steadily improving. Companies have enjoyed robust profits, and with productivity and hours stretched, eventually firms will need increased labor. The average workweek in the private sector has increased by nearly half an hour since December, adding the equivalent of about 1.5 million new jobs in terms of hours worked. So, don't be fooled this Friday because the negative headline number will surely be deceiving.