Article / 12 July 2016 at 5:02 GMT

3 Numbers: Will US job openings in May surge to an all-time high?

editor/analyst /
United States
  • The US Small Business Optimism Index should edge higher for June
  • Upbeat data will point to stronger numbers in the labour market for July
  • Survey data for Indian manufacturing hints at firmer output numbers
  • That would be a welcome rebound from dismal industry numbers in India
  • US job openings for June could post a record high in today’s release

By James Picerno

Two releases will provide fresh data for profiling the US economy today: the NFIB Small Business Optimism Index and the Labour Department’s monthly report on job openings. Meantime, India publishes new numbers on industrial activity for May, which will be widely read as the debate continues about the reliability of the country’s impressive GDP growth figures.

US: NFIB Small Business Optimism Index (1000 GMT) Economists are looking for a small improvement in small-business sentiment in the June update from the National Federation of Independent Business (NFIB), which is due out today. The fractionally higher projection will still leave this benchmark subdued compared to the levels for the second half of last year. But in the wake of June’s strong rebound in employment, it’s reasonable to anticipate that the mood among small business owners is due for an improvement.

 The daily grind ... Survey data for manufacturing suggest that industry output may be heading for a welcome rebound in India. Photo: iStock

Note that ADP’s estimate of employment growth for small companies rebounded last month. Firms with fewer than 50 employees added 93,800 jobs in June, moderately higher than May’s gain.

Last month’s survey data appeared to anticipate a modestly firmer trend in hiring generally. It showed that 56% of respondents reported hiring or attempting to hire in May, up three percentage points from the previous month. Hiring activity increased “substantially,” NFIB advised. “Overall, it appears that labour markets are tightening.”

If today’s survey release for June falls in line with May figures for employment, the news will support the case for expecting that we’ll see stronger numbers in the labour market for July.


India: Industrial Production (1200 GMT) If you accept the official GDP numbers, India is the world’s fastest-growing big economy. Output is rising at nearly 8%, according to the official data. But many economists are sceptical about the numbers, in part because the government revised its methodology for calculating GDP, which lifted growth rates sharply compared with growth under the previous model.

The weak trend in industrial activity isn’t helping convince investors that the world’s second-most populous country is expanding at a red-hot pace. The Hindu BusinessLine last month commented that “there can be no escaping the fact that the dismal factory output numbers for April do not sit well with the buoyant GDP data for the fourth quarter [of 2015] released barely a fortnight ago.

But survey data for manufacturing implies that a rebound is coming. The Nikkei India Manufacturing PMI ticked higher in June for the second month in a row, rising to a three-month high. Nonetheless, the 51.7 reading is still only modestly above the neutral 50 mark that separates growth from contraction. “The main contributing factors to the upward movement in the PMI were stronger rates of growth in new orders and output,” Markit noted at the start of this month.

The PMI rise suggests that industrial production’s 0.8% year-over-year dip through April is due to return to positive terrain. But not necessarily in today's data.'s consensus forecast sees production contracting again, albeit at modestly softer decline of 0.4%. Is that a clue that the trend is set to turn positive in June?


US: Job Openings and Labour Turnover Survey (1400 GMT) Yesterday’s update of the Fed’s Labour Market Conditions Index (LMCI) rebounded a bit last month, but remained in negative territory. This broad-minded measure doesn’t negate last week’s surprisingly strong report rise in payrolls in June, but the weak LMCI data suggests that job growth is still on track for modest gains at best.

But perhaps today’s estimate on job openings will paint a brighter outlook. Note that this data has been trending upward in recent history, in effect laying out the case that the labour market’s still firmly biased to the upside. Note, however, that the monthly employment changes, while still positive, show a bias for deceleration.

The sharp gain in headline payrolls, in other words, seems to be an outlier. But the outlook could change if job openings continue to push higher. Note that the rise in April to 5.788 million is an all-time high (for data that begins in 2001), matching the same level for July 2015.

A modestly softer number in today’s release for May will be a yawn. On the other hand, a new all-time high for openings will, at the very least, embolden the bulls and reaffirm the view that the labour market is still on track to expand for the foreseeable future.

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– Edited by Robert Ryan

James Picerno is a macro analyst/editor at Follow James or post your comment below to engage with Saxo Bank's social trading platform.


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