by Calculated Risk on 5/31/2012 02:36:00 PM

Tomorrow the BLS will release the May Employment Situation Summary at 8:30 AM ET. Bloomberg is showing the consensus is for an increase of 150,000 payroll jobs in May, and for the unemployment rate to remain unchanged at 8.1%.

• More weather "payback"? The weather was mild in January and February, and Goldman Sachs analysts think there will be some more payback in the May report, they wrote last month: "[O]ur current best guess is that weather has boosted the level of payrolls by around 100,000 as of February, and may have shaved about 20,000 from the March report ... 50,000 in April and the remaining 30,000 in May." Goldman's forecast is that "nonfarm payroll employment increased by 125,000 in May".

Here is a summary of recent data:

• The ADP employment report showed an increase of 133,000 private sector payroll jobs in May. This would seem to suggest that the consensus for the increase in total payroll employment is too high - especially since public employment probably declined again - although the ADP report hasn't been very useful in predicting the BLS report for any one month. However ADP report has frequently been weaker than the BLS report for the month of May (although this is based on only 11 years of data).

• We don't have the May ISM manufacturing and service indexes to look at for employment, since the employment report is being released earlier than usual this month (on June 1st), so the ISM indexes will be released after the employment report.

• Initial weekly unemployment claims averaged about 375,000 in May, down slightly from the 377,000 average in April. Claims have been at about this level all year.

For the BLS reference week (includes the 12th of the month), initial claims were at 372,000; down from 389,000 for the reference week in April.

• The final May Reuters / University of Michigan consumer sentiment index increased to 79.3, up from the April reading of 76.4 This is frequently coincident with changes in the labor market, but also strongly related to gasoline prices and other factors. This suggests a weak but slightly improving labor market.

• The small business index from Intuit showed 40,000 payroll jobs added, down from 60,000 in April.

• And on the unemployment rate from Gallup: U.S. Unemployment Edges Down in Mid-May

U.S. unemployment, as measured by Gallup without seasonal adjustment, declined slightly to 8.2% in mid-May from 8.3% in April. Gallup's seasonally adjusted unemployment rate is 8.5% in mid-May, down slightly from 8.6% last month. ... Incorporating the upward seasonal adjustment of 0.3 percentage points that the BLS applied last May yields a seasonally adjusted rate for mid-May of 8.5%.

Note: Gallup only recently has been providing a seasonally adjusted estimate for the unemployment rate, so use with caution (Gallup provides some caveats).

• Conclusion: The overall feeling is that the economy weakened a little in May, and that might mean the employment report will disappoint tomorrow. Also there could be a little more "payback" from extra hiring during the mild winter. However the combined ISM reports suggest the consensus is close. On the positive side, weekly claims improved slightly compared to April, and consumer sentiment improved - but that might be because of lower gasoline prices.

There always seems to be some randomness to the employment report, but once again I'll take the under this month (under 150,000 payroll jobs).

For the economic contest in June: