[ForexNews]

Today’s employment report was significantly better then nearly anyone’s expectations, highlighting that a turn in the economy may be imminent. Analysts continue to believe that the end of the formal recession is imminent, but question the strength of the recovery to follow. That said, the consumer may be on better footing later in the year from a demand perspective. Although debt growth will not drive consumption growth as it did in the last cycle, yet employment firming would imply somewhat better final demand come the end of the year.

The decline of -345k was “good” only in the context that average declines over the course of the year have been about -650k. More encouraged was that the slowing in the pace of decline was fairly broad based, though manufacturing jobs bucked the broader trend. Temporary help jobs, something of a leading indicator for broader employment trends, showed a decline of only 7k in May, far better than the average decline this year of about 70k. This is a sector worth watching. The broad diffusion index of employment (where “breakeven” of 50 represents an equal balance between industries increasing and decreasing employment) continues to drive higher, now at about 33 from the cycle low of about 20 reached in March. The unemployment rate rose sharply to 9.4% from 8.9%, but in the context that top line job losses were far better than expected and a rise to 10% is nearly baked-in, the jump was not as startling as might be expected. On balance, there were more encouraging signs than not in this report.