March jobs numbers disappoint–I mean REALLY disappoint
Talk about a bad set up for first quarter earnings season that starts on Tuesday, April 10.
Today the Department of Labor announced that the economy added just 120,000 jobs in March. That was down from 240,000 new jobs in February and below the median forecast among economists surveyed by Bloomberg of 205,000. The March disappointment also broke a string of months with gains of 200,000 or more.
Today’s numbers are a dose of cold reality thrown on any inclination that the U.S. stock market might have to look past disappointing first quarter earnings figures on the hope that U.S. economic growth for the rest of the year would be stronger than expected. First quarter earnings are forecast to have grown by just 0.93% from the first quarter of 2011, according to Standard & Poor’s Capital IQ. In the first quarter of 2011 the annual earnings growth rate was 19.7%. First quarter earnings season officially kicks off with Alcoa’s (AA) report after the close of the New York markets on Tuesday, April 10.
The number of new jobs wasn’t the only measure that fell in March. Weekly hours worked fell to 34.5 from 34.6 in February. Hourly earnings increased by 0.2% but with the economy creating only 120,000 new jobs in March, aggregate wages were flat on the month after climbing 0.7% in February. That’s not good news for an economy where consumer spending makes up 70% of all economic activity.
The official unemployment rate did drop to 8.2% from 8.3%, but that was only because 330,000 people left the workforce.
Oddly enough, the full unemployment number, the one that counts discouraged workers who have stopped looking for work and workers in part-time jobs who are looking for full-time jobs fell in March to 14.5% from 14.9%.
That oddity raises an important question: Are today’s numbers correct? The jobs numbers have been subject to huge revisions in the slow recovery from the Great Recession. Remember August 2010 when the initial report showed the economy added 0 jobs? That initial result was revised upward the following month to 100,000 jobs added in August.
Statistically, as Ezra Klein points out in his post on the Washington Post’s WONKBLOG today http://www.washingtonpost.com/blogs/ezra-klein/post/march-jobs-report-how-bad-is-it/2012/04/06/gIQAhnTXzS_blog.html , there’s a 90% confidence level that the economy added somewhere between 20,000 and 220,000 jobs in March.
That’s quite a margin of error. In the short-term, I doubt that the market will care about the quality of this evidence of a slowdown in the economy. In the short-term this is yet one more reason to sell after the great first quarter rally. If you were inclined to think longer-term, however, I would wait for the revisions in early April before drawing any conclusions about U.S. growth.
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BLS numbers are BS!!
Have yet to get a reasonable explanation on January’s loss of 1.2M workers and drop of job force participation rate to all time low of 63.7%.
Also, how much sense does it make that we lost another 330k workers in an encouraging job market???
Gorm
It happened to me again. It happens every year. I have a lot money invested in Jubax, yet every year I am locked out of my JAM account! And of course I can’t simply email anyone there, instead I have to call. And since no one works on the weekend, I have to wait until Monday. Very inconenient.
me too! how did you find the phone number to call? i only see the e-mail address…
There were many blogs about how the market was going to tank all the way through the Greek dept crisis, and look what happened. Most sat on the sidelines in cash over the last 6-months. I’m not quite sure the market hasn’t already discounted the slower growth going forward. It may take a breather, but what has fundamentally changed in 2-weeks that we need to panic and sell?
Tom, good point. But the same could be said about the last six months- what is so different now versus October 7 when the S&P was around 1100? Employment has picked up in the US, but I get the distinct feeling the move from 1100 was based on decreasing fear over China and the Euro zone, not the improving economy in the US. And China and Europe are still wild cards.
In my view, at 1100 people were looking for a reason to buy and pretty much any old reason provided sufficient justification and now it is the opposite. Last week it was spain, next week it might be Friday’s job report, or maybe it’s just cause May is almost upon us.
tomhotel -
Phone is 1-888-885-8225 but no one will take your call until Monday. You’re right there is an email address too. What bothers me is that this has happened repeatedly. I wish they could fix their software to not automatically lock investors out, EVERY year. That should not be rocket science but…
greedibanks, I agree with you. Same experience here. Took them 2 weeks to fix things last year. And I had to change my moniker as it was already in use (by me).
Regarding the market, the surveys say that the French President will lose the presidential election on May 7th. If that is the case, expect France to be downgraded and the markets to tank.
greedibanks and others with a service problem: When you get locked out of your account for some reason or another–and I think we fixed the problem over the weekend–email me directly at JubaksPicks@gmail.com. Please let me know if you’r still locked out but we did fix the problem for a number of accounts over the weekend. (It was an unfortunate side-effect of an update to the WordPress software that we use to publish.) Verfy sorry for the trouble.
THANKS Jim, issue resolved!