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Business/Finance See other Business/Finance Articles Title: Latest Jobs Figures Offer Something for Everyone; How Will Markets Sort it Out? Latest Jobs Figures Offer Something for Everyone; How Will Markets Sort it Out? Mike Larson | Friday, February 5, 2016 at 4:20 pm A Rorschach test. That’s what I thought of when I saw this morning’s January jobs report. On one hand, headline job creation missed expectations by a decent margin. We created only 151,000 jobs last month, compared with an average forecast for a reading of 190,000. That was one of the lowest monthly readings over the past couple of years. The revised figures for the past couple of months show a clear deceleration, too: 280,000 in November; 262,000 in December; and now 151,000 in January. On the other hand, the unemployment rate sank to 4.9% from 5% — putting it at its lowest level since February 2008. Average hourly earnings also rose a stronger-than-expected 0.5%, up from no change in December. Within industries, retailers added 58,000, leisure and hospitality added 44,000, health care added 44,000 and manufacturers added 29,000. The jobs numbers are out, but markets are having trouble interpreting the figures. I’m not sure how that squares with reality, considering manufacturing shares are in freefall, the ISM manufacturing index is hovering at its lowest levels since the tail end of the last recession and multiple companies are warning of large layoffs. I’m somewhat skeptical about the retail adds too, given lousy sales over the holiday season. But if you take the data at face value, those are decent numbers. On the other side of the ledger, the transportation and warehousing business lost 20,000 jobs. Mining lost another 7,000. Plus, temporary help employment fell by 25,000. That’s a potential leading indicator of declining full-time employment growth, assuming it persists for another month or two. Again, there’s a little bit of everything for Wall Street in these figures. But what’s my take? I believe wage growth lags job growth, and job growth lags underlying growth in everything from retail sales to manufacturing to service-sector activity. “Wage growth lags job growth, and job growth lags underlying growth.” If we’re heading into a recession, or even dangerously close to one, the LAST place you’ll see it is in the monthly jobs report. And within the jobs report, the last place you’ll see it is in wages. Many of the leading indicators I follow, and the activity in the credit markets, tells me the risk of recession is rising fast. So does the recent weakness in durable goods and services. Plus, we have now seen a couple months of weakening in the job-growth trend. Add it all up, and I’d say this report isn’t very encouraging. It seems the market agrees with me, given the 211-point shellacking the Dow Industrials took. Or stated another way, I’ve been advocating a careful, cautious, hedged investment approach and nothing I saw today changed that. Do you agree? Disagree? Is the unemployment rate decline enough to offset the slowdown in job creation? What do you think the Federal Reserve will, or should, do in response to figures like these? Do you take them as bearish or bullish for the stock market? Use the comment section to share your opinions. Poster Comment: Take it for what it's worth. Post Comment Private Reply Ignore Thread
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