Friday, October 08, 2010

Interesting jobs report

I'm breaking down the data right now, but while the headline was terrible - 95,000 jobs lost, U6 back over 17% - but the details are more mixed.

* The private payrolls rose 64k which was within range of expectations of +75k.

* The census job losses of -77k was almost spot on with expectations of -78k.

* The outlier was losses from local/state governments of -76k. I've said before that state and local governments will lag the private sector and could cause problems for the recovery crowd.

This is the problem for the markets with this report - it's not bad enough to guarantee full steam ahead for the Fed's quantitative easing program (which the market assumes is going to happen) but it's certainly not a "good" report that would indicate any sort of turn around in the economy.

I'll update with more info when I get a chance.

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So after looking at the data, I think this is a fairly weak report and I think the stock market is reflecting that -- again in bizarro world that is our stock market, bad news equals more fed efforts to undermine the US Dollar which will prop up stocks and commodities (as a side note, while the stock market is up over a 1.5% in the last week did you know that you still lost money even if you were fully invested? Yup, because the US dollar has fallen close to 2% your purchasing power continues to fall despite rising stock prices. Yippee!)

* This is a particularly troubling trend - "The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose by 612,000 over the month to 9.5 million. Over the past 2 months, the number of such workers has increased by 943,000. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job." Almost 10% of the part-time individuals have become part-time in the past 2 months?!?!

* The previous high for U-6 (unemployment + under employment + part-time) peaked at 17.4% back in October and we're back at 17.1% now.

* Hours worked was flat again.

I think as people have digested this information they've become more comfortable with the fact that the Fed is going to push $2 -$3 trillion into the market come November. Thus, stocks are up in nominal terms (though down in real terms) for the time being.

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