Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Dismal U.S. Jobs Report Is Not Important!

Stock-Markets / Financial Markets 2011 Jan 08, 2011 - 05:31 AM GMT

By: Sy_Harding

Stock-Markets

Another month - another disappointment in the employment picture.
But it doesn’t matter! The economic recovery continues. Employment is a lagging indicator.


A month ago the consensus forecast was that 155,000 new jobs were created in November. When the November jobs report was released in early December it was terrible, showing that only 39,000 jobs were created. (The economy needs approximately 150,000 new jobs monthly just to keep up with the growing population). It was also reported that the already high unemployment rate ticked up from 9.6% to 9.8% in November.

A month later, with the economy continuing to improve, the consensus estimate has been that 175,000 new jobs were created in December.

Wrong again. The report this morning was that only 103,000 new jobs were created in December. The consensus estimate was also that the unemployment rate would hold steady at 9.8%. That was also wrong. The unemployment rate fell quite dramatically to 9.4% (but that was probably due to so many unemployed people giving up on finding a job).

For many years I’ve called the Labor Department’s monthly employment report the Big One among economic reports. Not because it’s more important than other reports, because it is not - but because it is impossible to forecast and therefore has the record for most often coming in with a surprise in one direction or the other.

It’s also the big one because the financial media holds the report up as an important leading indicator of the economy - which it also is not.

Employment is a lagging indicator. Employers do not hire additional full-time employees until after the economy has recovered so much that their present employees cannot keep up with improved business. That, by the way, makes a number within this morning’s report particularly telling, and that is that the average workweek for all employees held steady at 34.3 hours in December. Employers normally increase the hours for existing employees before hiring more workers.

Employment therefore lags behind the economy and is not of near as much importance as the media places on it.

The leading indicators of the economy are measurements of consumer activity, obvious since consumer spending accounts for 65% of the U.S. economy. That makes retail sales, home sales, auto sales, consumer sentiment, factory orders and the like much more indicative of the economic recovery than the employment reports.

And those consumer-related indications continue to improve. Among reports of recent weeks that came in better than forecasts were consumer sentiment, retail sales, home sales, construction spending, auto sales, factory orders, the ISM Mfg Index, the ISM Non-Mfg (service sector) Index, and so on.

Additionally, the disappointing jobs report will provide the Federal Reserve, which also overemphasizes the employment picture as an important indicator, with reason to continue with its quantitative easing program, additional fuel for the economy.

So, the economic recovery is continuing, which bodes well for the stock market in 2011, the usually positive third-year of the presidential cycle.

But that does not mean investors can relax just yet.

Short-term, the stock market is overbought, and investor sentiment is at high levels of bullishness and complacency usually seen at rally tops.

The disappointing jobs report could have the effect of providing the catalyst for the stock market to correct enough to alleviate that overbought condition and cool investor sentiment off to a healthier level.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website www.StreetSmartReport.com, and the free daily market blog, www.SyHardingblog.com.

© 2011 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in