Positive Labor Market Report

With the debt ceiling issue now thankfully behind us, the focus has shifted to the U.S. economy’s fundamentals. And recent reports on the economy’s growth momentum in the third quarter have been less than reassuring.

We got more color on the economy this morning with the modestly-better-than-expected July jobs report from ADP, the payroll processor. We also have the ISM service sector and Factory Orders reports on the docket. Europe appears to be again in the news for the wrong reasons, which is pushing the yields on the Italian and Spanish government bonds higher.

On the labor market front, the ADP report came modestly ahead of expectations, with 114 thousand private sector jobs created in July. The prior month’s number was modestly revised downwards. The primary value of the ADP report is in foretelling the official monthly numbers from the Bureau of Labor Statistics (BLS). The July BLS number comes out on Friday, with expectation for the headline number at 75 thousand and private-sector jobs at 100 thousand.

Today’s ADP report is broadly inline with the expectations for the Friday BLS report, which should be counted as a net positive in these grim days. Overall though, the ADP report’s track record in foretelling the BLS report has not be very stellar lately. In June, it overestimated the BLS private sector number by almost 90 thousand, while the month before it underestimated the same by around 45 thousand. We will have to wait till Friday morning to find out how good of a job this month’s report did.

The earnings season is winding down, but we did have a few key earnings releases this morning. We had a solid earnings and revenue beat from Mastercard (MA). Time Warner (TWX) also came out with EPS and revenue beats. Comcast (CMCSA) modestly came ahead of EPS expectations on solid revenue gains.

• Become A Funded Futures Trader