Friday, May 3, 2013
The market finally has a good enough reason to go up today in the
April non-farm payroll report. Not that it needed any prompt from
economic data to go up; stocks have been going up irrespective of
economic and earnings data lately.
The 'headline' April jobs number of 165K came in better than
expectations of about 150K and March's 138K level (revised higher
from 88K). The consensus estimate did not fall much following the
weaker than expected report from ADP on Wednesday, though many
were 'ready' for another soft jobs report. Today's positive jobs
report follows weeks of soft economic data, including this week's
weaker than expected ISM and ADP (
) surveys. We get the service-sector ISM survey sector a little
later today, but the manufacturing ISM survey earlier this week
was barely in the positive territory.
The revisions trend was particularly positive, with net positive
revisions to March and February adding 114K to the total. March's
originally reported 88K tally was revised higher to 138K and
February was raised to 332K from 268K. Average weekly hours for
the private sector ticked down by 0.2 hours to 34.4, while
average hourly earnings went up by 4 cents $23.87. The labor
force participation rate remained unchanged from the March level
at 63.3%, but down from 63.6% in January.
Private sector jobs totaled 176K in April, up from 154K in March,
but significantly below February's 319K tally. The private sector
gains were concentrated in professional and business services,
food services, retail, and healthcare. Professional and business
services added 73K jobs in the month, bringing the industry's
12-month tally to 587K (Temporary jobs were up +31K in April).
Contrary to fears, Retail added 29K jobs in April, which should
help ease concerns that the payroll tax changes were a big drag
for the sector. Construction and manufacturing didn't add any
jobs during the month.
This is a good report and should help ease concerns about the
economy a bit. And it's a market-friendly report in the sense
that it doesn't affect expectations about the Fed. Monthly job
gains in the April vicinity are not strong enough to prompt the
Fed to scale back its bond purchase program. The market's upbeat
response to the recent spate of soft economic reports that has
pushed stocks into record territory is based on the assurance
that the Fed will continue its cheap money policy. Today's jobs
report wouldn't change that view.
Director of Research
AUTOMATIC DATA (ADP): Free Stock Analysis
NASDAQ-100 SHRS (QQQ): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
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