Friday, May 06, 2011

Jobs report follow-up

So the stock market clearly likes the report as the indexes have all rebounded over 1% on the news. The question I have is, does the market like the report because it signals a rebound in the US economy or do they read the report as relatively weak and thus an indication that the Fed will keep priming the pump this summer? Either answer equals higher stock prices today but it's going to be something to watch.

Just to put a bow on the jobs report, I'd characterize this as another okay report, with some disturbing negatives.

* There was some confusion from the fact that the economy added jobs but the unemployment rate grew. These two items actually come from different surveys. The establishment survey tells us that we added 244,000 jobs (that's the number you'll hear repeated all day long), while the household survey actually reported a loss of 190,000 jobs (this is the number you'll never hear about). This difference is usually due to timing issues and the data should merge over time, but it's a pretty wide spread.

* As I said before the jobs added were in low value added industries (like retail, food service, and healthcare) which tend be lower in pay. I still argue that all jobs are not created equal but my voice is in the minority here.

* The all encompassing U-6 ticked back up 15.9% and remains stubbornly high.

* The average workweek was unchanged and average hourly earnings increased slightly.

Here's the chart of the day:

Full-time employment vs. Part-time employment in the US. We're all temps now :)

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