ADP and Challenger Job Reports

Today's job reports offered a mixed bag of information, and "The Greek" still sees tougher labor market days ahead. Visit the front pages of Wall Street Greek and Market Moving News to see our current coverage of economic reports and financial markets.

The day led off the monthly parade of employment data that concludes on Friday with the Employment Situation Report. Today, we received the regular private market employment report and the schedule of planned layoffs.

ADP National Employment Report

ADP's private market nonfarm payroll figure serves as a prognostication tool for economists, but only for just two days ahead. In any event, we've seen variability between the two data points in months past, so we cannot buy into the result hook line and sinker.

However, you had to be enthused to see that, according to ADP, the labor market added 40,000 private sector jobs in May. First of all, better a positive number than to see job attrition. Secondly, the figure was significantly improved from April's revised higher rise of 13,000. Okay, so back to reality...

That's Where the Good News Ends

A private market increase is not in and of itself indicative of a healthy environment. The overall job market naturally grows over time with the population anyway.

The goods producing sector continues to suffer, which is no surprise to Michigan residents. General Motors (NYSE: GM) and Ford (NYSE: F) have been two of the most publicized job shedders during this economic downturn, and today, service sector employer United Airlines (Nasdaq: UAUA) joined Delta (NYSE: DAL) in cutting planes and employees.

The goods producing segment shed 37,000 jobs this past month, and in doing so recorded the eighteenth consecutive monthly decline. Sure, and why... because we've been losing manufacturing jobs to emerging markets anyway, recession or no recession. The manufacturing sector alone lost 26,000 jobs this month, marking the 21st consecutive month of decline.

However, the service sector posted an increase of 77,000 jobs. I guess mafia thugs are finding legitimate work these days, repossessing cars and foreclosing on homes. Loan default mitigation, also known as loan sharking in the mortgage business, must be offering new college grads an interesting gig. Heck, financial activities added 5,000 jobs in May. Lawyers are busy too, drawing up severance contracts and bankruptcy papers.

Election season is likely helping also, as our compatriots staple posters to telephone poles, make fund raising phone calls and search through personal records to dig up dirt on rival party candidates. Election season is basically keeping the advertising industry in business this year. The bars in America are full as well, but those across the Caribbean and other favorite destinations of gringos are likely only full of starving mosquitoes these days.

The construction industry continued to shed jobs. Once a likely leading employer of illegal immigrants (that's what my strong sources tell me anyway), those guys are long gone, and now even carpenters with seniority are looking over their shoulders. Construction cut 13,000 employees this month, taking the total jobs lost since the August 2006 construction peak to 298,000.

More Good News Though

The long-term chart of the ADP and Bureau of Labor Statistics measures seems to paint the possibility of early recovery. As usual, employment was steadied by small businesses, as America's entrepreneurs persevere through this economic tough time. "The Greek" posits another possibility.

Greekism: For guys like me, who have worked their tails off for their slave masters in cage-like cubicles over a period years, giving their blood, sweat and tears for the man, layoff can offer the perfect catalyst for a new beginning. You realize just how insignificant you are to a large organization, and how much more you can do for yourself on your own. We suspect many of America's best small businesses, which likely grow into greater organizations, get started at times like these.

Challenger, Gray & Christmas Job-Cut Report

Challenger's Job Cut Report matched up with the ADP data about as well as man-giant Shaq might with my favorite little Greek actress, Maria Menounos. Yes, that was a cheap and cheesy attempt at getting Maria's attention... it's a blog remember! God she's pretty though isn't she?

Challenger reported announced layoffs at a monstrous 103,522, compared to last month's 90,015 and March's 54K. Labor market changes likely follow economic inflection point though, so don't get all frantic on me now. We told you last year that unemployment would be late in coming.

Employment Outlook

Even so, Bloomberg notes consensus expectations for Friday's reporting of unemployment at 5.1%, just a tenth of a percentage point above last month. "The Greek" continues to expect unemployment to move higher throughout the year. Soon, tax rebate dough will dry up, and retailers will find empty aisles as Americans make due with last year's fashion. As the still fat restaurant and retail market consolidate, plenty more job cuts are likely on their way.

Please see our disclosure at the Wall St. Greek website. Article interests AMEX: DIA, AMEX: SPY, AMEX: SDS, AMEX: DOG, AMEX: QLD, Nasdaq: QQQQ.