Friday, March 04, 2011

Jobs report looks good

The jobs number was just about inline with expectations.

Positives:

192,000 jobs created
Growth in construction (seriously what are we building more craptastic shacks in Phoenix?)
Growth in manufacturing
Growth in Health Care
Growth in Temp Help
Average hourly earnings were up slightly
Pretty significant upward revisions to Jan and December data.

The only fly in the ointment is that pesky Birth/Death adjustment which added 112k jobs to their the BLS black box model (we are never told what impact the birth/death number has on the final number so we can just look at it and wonder).

I don't deny that people are trying to start companies. You can look at Jefferson County's latest "Doing Business As" filings and see 44 new "start-ups" in February. Here's the problem that I see: how many of these businesses will be around by July 1st? A partial list of these start-ups includes:

Mobile car wash
crafts
gift shop
candy maker
resale
towing (2)
antiques
silk flowers
event planning

I wish all of these people the best of luck but I think it will be challenging for many of them. I think the local economic development authority has been very successful in showing people the ease with which you can start a business (which does directly impact the government's jobs creation data). Running a business successfully is another story.

So, here is the trouble with this report. If this jobs report is a true reflection of the economy then the Fed should cease all stimulative activity because clearly the economy is recovering. However, the Fed seems to be of the opinion that the economy is not recovering or else they wouldn't be going full throttle with their current round of easing and hinting at more easing later this year.

Something doesn't mesh between this report and other data points in the economy, but this is the data that will drive the news cycle for the next 3 days.

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