Recession talk is fast and loose these days, but a fair amount of the chattering on this topic is anecdotal. Fortunately, there are a number of superior (i.e, relatively objective) metrics to consider based on hard data and robust modeling, including one technique that shows up regularly on The Capital Spectator (see last month’s update). But even if you’re adhering to best practices, there’s still the problem of a time lag. In some cases, we have to wait a month or two before we see fresh figures for a given indicator, which is usually reflecting some period in recent history. There’s also the matter of revisions to consider. Signals can change as updates for previously released numbers are published. One way to bridge the gap is with market data, which are available in real-time and immune to revisions.
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● US firms add 201,000 jobs in May, ADP says | LA Times
● US trade deficit drops sharply to $40.9B in April | USA Today
● US Job Creation Index Edges Up to New High in May | Gallup
● U.S. Service Sector Grows At Slowest Rate In Over A Year In May: ISM | RTT
● US service sector activity growth slows in May: PMI | Markit
● Global employment rises at quickest pace since end of 2007: PMI | Markit

US companies added 201,000 to payrolls in May, according to the ADP National Employment Report. The gain represents a solid improvement over April’s 165,000 advance. Although economic growth remains modest, today’s update suggests that recession risk remains low for the US. Today’s release also strengthens the view that Friday’s official jobs report from Washington will deliver upbeat numbers.
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The expected risk premium for the Global Market Index (GMI) inched higher in May, rising for the first time in four months. GMI — an unmanaged, market-value weighted mix of the major asset classes — is projected to earn an annualized 3.9% over the “risk-free” rate in the long term. (For details on the equilibrium-based methodology that’s used to generate the forecasts each month, see the summary below). Today’s updated estimate, which is based on data through the close of last month, increased 20 basis points from the previous projection.
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● US May auto sales race to strongest pace in nearly a decade | Reuters
● US factory orders fall for eighth time in nine months In April | MarketWatch
● OECD Cuts Global Growth Outlook as Investment Lags | Bloomberg
● Eurozone Growth Ticks Lower In May: PMI Composite Index | Markit
● German yields extend rise on inflation, Greek prospects | Reuters
● China’s service providers see sharpest rise in new orders for 3 years: PMI | Markit

Private nonfarm payrolls in the US are projected to increase by 167,000 (seasonally adjusted) in tomorrow’s May update of the ADP Employment Report, based on The Capital Spectator’s median point forecast for several econometric estimates. The median projection represents a fractionally lesser increase vs. April’s rise.
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Judging by the comments of several high-profile perma bears, the US economy should be in recession any day now. But the Treasury market seems to be reading a different script.
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● US consumer spending flat in April, higher incomes boost savings | USN&WR
● US ISM mfg. index edges up to 52.8%, beats expectations | MarketWatch
● Global manufacturing growth ticks higher in May: PMI | Markit
● Slowest increase in US mfg. new orders for almost 18 mos. | Markit
● Eurozone y-o-y consumer prices in May rose for the first time in 6 months | WSJ
● German Unemployment Falls In May | RTT
● Greece debt crisis talks held as deadline nears | BBC

Consumer spending was unchanged in April, the US Bureau of Economic Analysis reports, but income delivered a better-than-expected rise. There’s also upbeat news for private-sector wages for April, which posted moderately stronger growth–growth that translates into a faster year-over-year gain. The firmer numbers on wages, the primary source of personal income, implies that the recent softness in consumption is self-imposed rather than the blowback from a slump in household earnings. The upward trend in the income ledger is still modest, but it provides another clue for arguing that the US economy isn’t in danger of sliding into a new recession.
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Gross domestic product (GDP) is down, but gross domestic income (GDI) is up. One hints at the possibility of a recession for the US while the other still points to growth, albeit at a lesser pace than we’ve seen recently. GDP retreated by 0.7% in the first quarter, but GDI—considered an alternate and arguably superior measure of economic activity—increased 1.4% (real seasonally adjusted annual rates).
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