Markets: News  

MarketWatch First Take

Better news on labor front, but the threats remain

WASHINGTON (MarketWatch) -- The sun peeked through the clouds shrouding the economy on Thursday, but the threat is not gone.

After a decidedly negative reading on the factory sector on Monday, the economic data turned more ambiguous on Thursday, with signs that the labor market may be firmer in June than it was in May.

The Labor Department reported that the number of first-time applications for unemployment checks declined by 14,000 to 374,000 last week. That's the lowest in six weeks. Read our full news coverage of jobless claims.

Furthermore, private payrolls expanded by a better-than-expected 176,000 in June, according to the ADP employment index, which is based on payrolls processed for thousands of companies by ADP. Read our complete news coverage of the ADP employment report.

Now, 176,000 new jobs isn't enough to set the world on fire, or to bring down the unemployment rate very quickly. But it is an improvement on the very weak hiring in April and May, and it counters the gloomy news of recent months.

The unexpectedly improved news on the labor market this week prodded economists at Goldman Sachs to raise their forecast for Friday's official payroll report to 125,000 from the 75,000 they had been predicting. The MarketWatch consensus forecast for Friday's report from the Bureau of Labor Statistics remains at 100,000 net new jobs, slightly higher than the 69,000 that were created in May. See our economic calendar and forecast.

The addition of 100,000 new jobs would barely keep pace with the population growth, never mind the need to find jobs for tens of millions of people who've been without jobs for months or years. Still, 100,000 is better than nothing.

Other headlines reminded us that growth is weak and fragile nearly everywhere.

Here in the United States, retailers reported weak sales in June, while the services index of the Institute for Supply Management fell. And abroad, the big news was about central banks stepped up their support for weak economies in Europe and Asia. The European Central Bank cut rates to a record-low 0.75%; the Bank of England announced more quantitative easing; and the People's Bank of China cut its key lending rates. Read about Europe. And read about China.

--