On July 5, ADP released a report on the U.S. job market which revealed that private hiring rebounded to add 176 thousand jobs to the economy in June after a very disappointing 69 thousand in May. Although ADP's report will not have the same effect on investors that the Friday release of the government's employment numbers will, many economists had expected job growth to continue to slow in June. The hot summer's effect on crops (specifically corn) could raise food prices, and uncertainty in Europe combined with reports of slowing growth in China were expected to have a greater negative effect on the job market.
Claims to receive state unemployment benefits also dropped 14,000 according to the same ADP report, but the four-week moving average for new claims, the only good way to measure trends in the labor market, fell 1,500 to 385,750. Although unemployment remained at 8.2 percent, fears that the economic recovery could come to a grinding halt if the job numbers got worse than they were in May have been weighing on both investors and voters.
There was some controversy last month when conservative governors were asked to refrain from discussing positive economic news because it wasn't on message with the Romney campaign. Many conservatives have correctly pointed out that if Mitt Romney wins this election he'll win it by talking about the economy. Mitt Romney is not the most likeable candidates for conservatives or moderates, and many of the GOP's social positions are alienating independents, so Romney must focus on the economic policies he would pursue that President Obama would not.
The twist is that if the recovery picks up an unexpected amount of momentum heading into the fall it is unlikely that there will be a whole lot the Romney campaign can do to convince the electorate to make him president. Of course one good ADP jobs report is not going to significantly alter the race, but if the job market does improve and the Euro zone can reach some agreements on a banking union and austerity v. growth it will do irreparable damage to the Romney campaign.