The U.S. economy keeps chugging along. It might even be picking up steam.
(Not that the stock market is in any mood to listen today.)
Nonfarm payrolls added 290,000 jobs in April, according to Department of Labor data released today, May 7. That’s well above the consensus projection of economists for an 187,000 increase. It’s the largest monthly gain since March 2006.
And the quality of the added jobs seems solid. Private payrolls, which exclude temporary workers hired by the government for the census, added 231,000 jobs. Only 26,200 jobs were temporary service jobs. So most of the gain consisted of private sector, full-time jobs.
Which goes a long way to explaining why the economy added jobs and yet the unemployment rate went up to 9.9% for April from 9.7% the month before.
More workers who had stopped looking for work—and who therefore don’t get counted in the official unemployment rate—saw a growing economy and decided to start looking for work again. That—in April the labor force increased by 805,000 workers–temporarily drives up the official unemployment rate but it is an important step toward getting the total number of unemployed down. The full unemployment rate, which includes discouraged workers and workers with part-time jobs who would prefer full-time jobs, rose to 17.1% from 16.9% in March.
Economists estimate that it takes a minimum monthly job growth of 110,000 just to keep up with the natural growth in the labor force.
Jim,
I agree about European stock markets. It’s pretty much a desert.
The problem with Europe isn’t the stocks, but rather the potential collateral damage if the EU economy goes south. We have a lot of companies in the U.S. that export to the EU. How much will problems in Europe impact their bottom lines? Since we don’t know how the Euro-mess will play out, we don’t really have an answer yet.
My thoughts on this to quote barron’s:)
Of the 290k jobs added, you had 188k added by the birth death model used at the BLS, this is where they “guess” the number of jobs added or removed due to seasonal factors. Now keep in mind that early this year they (the Govt) came out and upped the number of laid off people by almost 900k (for 09) (also considering that only up to 8 mil laid off this is a huge bump up) But that got no press.
Also I have a hard time believing the govt is going to hire 500k more census workers, have them background checked, and trained AND laid off in less than 8 weeks. So far they have only hired 100K (in the last 2 months according to offical numbers) so that leaves them 500k and only until July to get the whole thing over with, so I have a hard time believing that there hasn’t been more hanky panky going on with the temp workers number going up.
It is going to be tough to see truthful numbers coming out with an election year and all. Just wanted to add 2 cents in here as I hardly ever see anything mentioned about the birth death model amd see how much of the numbers this is I thnk it should get more press.
From Annaly Capital Mgmt:
“The Household Survey has shown an increase of 1.1 million jobs since January 2010. However, workers employed part-time due to economic reasons have increased by 836,000 over the same period, seemingly accounting for 75% of 2010 job creation.”
http://pragcap.com/how-good-was-the-jobs-report
I guess the question is: why should anyone put money to work now until we have found out where this ends up. Precious metals seem like a no brainer since the dollar seems to be doomed. Cash will always work. But how does anyone know where the market will end up tomorrow or next week? Last week the general PE was closed to 18-20 which is at the upper end of the band. All the risk is to the downside with hardly any gain to the upside – unless – unless – one wants to tightrope along another bubble. And risk falling.
Jim
I guess the big question is when to get back in and what sector. I know in the past you had discussed the different phases of a recovery and the sectors which might be best historically. I am sitting on cash. I moved from having 30% cash to slowing selling winners over the past couple of months. Now I am at 60% and want to know where to put it. Of course it is hard to call a bottom. I am holding my long positions and gold. My question, what now?
Jim,
I am not pessimistic (I am buying stocks like crazy now, while selling all my Ultrashort positions), I am just realistic about things. There is no super excitement in the US about economy, there is no a front runner in this current recovery (1.5 years ago we thought that renewables will do it), so everything is so shaky. My personal portfolio is up 12% this year, with 25% of it in cash. I actually feel quite good about everything that is going on right now. I was expecting this correction to happen, and it happened. Once again I learned a famous Soros trick of how to make money (I think he is doing the best in bear markets).
Something I don’t get based on the speculation that caused the unemployment rate to jump from 9.7% to 9.9%.
How did the people that gave up, all of a sudden KNOW that the job market had picked up and they should jump in, when for the most part the jump in the month was unknown to everyone until after the month was finished?
Boy, we are pessmists this morning. I don’t think yhou need to get excited about the jobs number. 200,000 jobs when we lost 6-8 million in the Great Recession isn’t anything to go raving aboiut. But the U.S. economy is in decent shape. Stocks sold off in a panic yesterday. (And yes, I agree, it wasn’t because of a computer error.) I’m certainly not able to call a bottom but I do know that U.S. stocks are a better b argain today than they were last week. So I’m picking around a bit. (And Ed, to me the problem in Europe isn’t with the PIIGS but that I can’t find a whole lot that I’d rush to buy even if the crisis weren’t a factor. Where’s the growth?)
There is nothing to be excited about. More jobs? Sure … Just because companies were not willing to hire people to replace those who naturally retired or moved somewhere else.
Europe is unstable. Euro goes does, and the whole exporting business, which targets Europe, goes down by roughly 20%.
Where is the excitement, which I am failing to see?
I think the DOW is headed for 11300, on its way to 15000. Go “all in” today?
I’m curious why the overseas markets sold off big last night. Didn’t they hear it was all just a computer error? Boy, are they stupid foreigners. (that was sarcasm, in case you didn’t recognize it).
Mainstreet is starting to recover…. Sooner or later definitely good for Wall street.
If we see hiring accelerate into the summer we should get a huge boost. I think the most important thing will be that home prices will stabilize
“And the quality of the added jobs seems solid.” Not so much… http://www.zerohedge.com/article/290k-payrollsadded-unemployment-goes-back-99-underemployment-171
Jim,
That’s good news. Really, it is. But until Europe shakes off it’s PIIGS problem, it’s hard for me to get excited about it.