Data nerds, this is your week.

We’re looking at a goldmine of leading indicators: ISM and S&P Global PMIs, the NFIB labor report, and the April payrolls release all drop in the days ahead.

The ISM indices offer a sneak peek into hiring plans. While predicting monthly payrolls is more art than science (too many short-term distortions), broader trends do speak volumes.

Look at the chart above. It shows how the long-term average of the ISM Employment Index has reliably led payroll trends over time. Right now, there’s no sign of recessionary signals. If anything, the data points to steady, trend-level job growth in the 170–180K range.

Sure, there are plenty of wild cards, including the quirky distortions like the effects of DOGE, but based on fundamentals, that’s where the trend sits.

We’ll find out soon enough what Friday’s number has to say. Stay tuned.

The Macro Week In Review

How Likely Is A Recession?

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The Macro Week Ahead

🍻 "The Government Spends Like A Drunken Sailor … 

… no, it doesn’t - a drunken sailor spends his own money.” This quote came from J.P. Morgan CEO Jamie Dimon last week during an interview at the Reagan National Economic Forum where he discussed U.S. fiscal policy, immigration, waste, and the U.S. Dollar’s status as the world's reserve currency.

The always opinionated CEO was extremely candid in describing many of the issues (and fixes) that could help U.S. economics and geopolitics. He described the main problem stemming from “the enemies within,” meaning a national alignment of values and capabilities is needed to address the unsustainable path of U.S. debt.
Much of what he discussed seems like low-hanging fruit to those of us outside D.C., yet bureaucracy, undisciplined financing, and the pervasive influence of special interest groups on both sides of the aisle have made any meaningful reset nearly impossible.

The recent draft of the “Big, Beautiful Bill” amidst an already expanding deficit are clear evidence of this. The interview was some of the best finance content we’ve seen lately. We highly recommend it.

💐 Takeaways From April & May Data

The April data from business cycle indicators and sentiment surveys suggested a sharp slowdown in U.S. economic activity following the enactment of global trade tariffs. Furthermore, inflation indicators, such as the pricing components of the PMIs and consumer expectations, suggested CPI/PPI trends will head toward the mid-single digit level by mid-2025.

In general, May data (thus far) has offered some reprieve from what appeared to be an economic calamity just a short time ago, but it’s complicated due to the constantly changing policies on tariffs and fiscal developments.

Trends in inflation have moved lower over the last two months with the Fed’s preferred metric, Core PCE, at 2.5% vs. 2.9% in December. This was still an April data point and we’ll likely need a few more months to see tariff-related inflation seep through to the major indicators. Anecdotally, some large U.S. retailers are, unsurprisingly, reporting massive cost increases from the import tax, and we expect at least some portion will be passed on to the U.S. consumer.

📅 The Week Ahead

Monday begins with the final estimate of the S&P Global US Manufacturing PMI for May, with the preliminary headline number at 52.3. At 10:00 am, we’ll see our preferred PMI, the ISM Manufacturing Index for May, with the headline consensus estimate sitting at 49.5, which is just slightly below the growth/contraction threshold of 50. Considering the on-again-off-again cadence of tariffs, the subcomponents such as Production (44 in April), New Orders (47.2), and Inventory (50.8) will be critical to assess the amount of channel fill occurring at new higher prices ahead of July’s deadline.

The Prices Paid component hit 69.8 in April compared to its cyclical trough of 40 in 2023. We expect to see continued elevated readings for the next two months, at the very least. One reason for this is continued strength from U.S. consumer spending with the Johnson Redbook Retail Sales Index at +6.1% for the week of 5/23.
One factor still supporting consumer spending is the health of the U.S. labor market. JOLTS is released on Tuesday where we’ll see April’s job openings, quits, and layoffs. To the extent that April’s triple-digit tariff threat concerned employers, we could see labor markets cool incrementally despite very tight conditions.

Layoffs at just 1.0% in March aren’t indicative of an imminent recession, but we’ll get more timely data with ADP’s Employment Change for May on Wednesday. The April data point of 62k private job adds came in below the forecast of 115k with the print stating, “unease is the word of the day. It can be difficult to make hiring decisions in such an environment.”

In terms of employment statistics, financial markets tend to place more emphasis on the Nonfarm Payrolls release on Friday at 8:30 am. Compared to soft data from ADP in April, NFP added 117k jobs vs. the 138k forecasted. These two data series are always lumpy month-to-month. Consensus stands at 125k new jobs in May and the Unemployment Rate is anticipated to remain stable month-over-month at 4.2%.

If we use the University of Michigan’s consumer expectations for employment as a leading indicator of the unemployment rate, we should start to see this rate increase significantly over the next few months.

Should labor markets begin to show meaningful deterioration, that would be a major development for U.S. markets. The Fed remains content with its current policy rate as it waits for tariff-impacted data to provide a better guide on monetary policy. The next Fed meeting is on June 18th, and financial markets expect just a 5% chance of a cut compared to 100% post Liberation Day.

Deteriorating labor markets coupled with tariff-related inflation, or stagflation, puts the Fed’s dual mandate at odds, as stimulative policy to save labor markets exacerbates the inflation problem. Fed Chairman Powell says its course of action depends on how far each variable is from normal and the pace of deterioration.

Macro Job Board

Global Macro Cross Asset Investment Strategist @ StoneX Group (New York)

Seeking a highly motivated Cross-Asset Macro Strategist to join our fast-paced and dynamic team. This is a sell-side research role designed to support the Chief Market Strategist (CMS) in delivering cutting-edge research and actionable investment strategy across multiple asset classes.

Macro Credit Research Analyst @ KBRA (New York)

Expected to monitor, gather, and analyze macroeconomic and financial markets data. Will assist senior analysts in idea generation and the production of KBRA Strategist research reports, presentation slides, and decks.

Global Macro Research Analyst @ Goldman Sachs (Washington, DC)

This candidate will closely monitor political and policy developments 
and assist economists to publish timely and innovative research on macroeconomic, political, and policy developments and their economic impact. They will also work on economic research projects and publications.

What We Read This Weekend

🏡 Return Of 100% Mortgage Gathers Pace Targeting First-Time Buyers

💥 How The Next Financial Crisis Might Happen

🛢️ OPEC+'s Crude Output Hike Comes Amid Tepid Asian Oil Demand

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