March jobs number tomorrow but is anyone watching?

I posit the question above because as March is sure to follow February, tomorrow’s jobs number is sure to show an increase of jobs again and could be close to 200,000 for the second month in a  row.  However, I am reading and hearing less and less leading up to this announcement as the markets are occupied with “freedom fighting” in North Africa and the Middle East, earthquakes, tsunamis and possible nuclear meltdowns.  This says nothing of the problems in Europe that have not gone away, just on holiday as they say across the pond.  Portugal’s debt was downgraded this week, Spain’s prime minister resigned over a spat with their congress about austerity cuts and the budget.  The world and the financial markets have had a lifetime of black swan events lately and are looking less and less at tomorrow’s number because they expect it to be good, if not then the market which is ripe for a correction may just get one.  My research tells me the governments’ number should be good as the weekly jobless numbers have been dropping for weeks.  This week’s Challenger, Gray and Christmas layoffs number dropped and the CEO roundtable report indicates that companies are poised to hire more employees over the next 6-9 months.  You add to that the good manufacturing and non-manufacturing (service) numbers, low inflation and record corporate profits and you have an economy that is expanding, not rapidly but expanding.  As I have written and said publically for months now, corporations will get to a point where they can’t work their employees any harder even if they pay them more so they have to hire more people to grow their businesses.  Their shareholders may not want them to do this as stocks prices have gone skyward for over a year now as corporate managers have learned to do more with less with the help of technology.  The one odd thing that may happen tomorrow is that the unemployment rate will probably tick up to 9% or higher, why you might ask is this happening as jobs are being created.  The reason is that many people have simply stopped looking for a job so they don’t show up on the jobless survey which makes up the non-farm payrolls report. If they start looking for a job again because they hear things are picking up in the economy, voila, higher unemployment rate as jobs are created.  With every non-farm payroll report, the internals matter, the government will shed jobs as the private sector should show nice increases. 

What's not too like

Good morning everyone, the February jobs report was just released and it shows nice hiring in most areas except local and city governments which lost 30,000 jobs.  The headline number shows a gain of 192k vs an expected 175,000 jobs created and January was revised higher to 63k from 36k.  In strong economic times, all reports are reported for the better not the worse as we are seeing today.  The most important area in my opinion is what happened in the private sector as opposed to the government sector as private businesses added 222k jobs vs an expectation of 198k and January was revised to +68 k from +50k.  One area of pleasant surprise is the unemployment rate which dropped to 8.9% from 9.0% which is a little confusing, but we will take it.  It is confusing because the rate over the last two months is believed to have dropped because many people became frustrated in looking for a job and dropped out of the workforce thereby increasing the rate.  I believe the rate is likely to move back above 9% over the next few months as more people become enthused about job prospects and re-enter the workforce at which point it will eventually head lower for good.  The hourly earnings were flat at 0% vs. an expected increase of 0.2% and the workweek averaged 34.2 hours which is unchanged from January.  This means that employers were not working their employees any longer hours and not paying them more either, this may indicate that the corporate managers may reached the tipping point where they are forced to hire in order to grow their businesses.  The futures market was quite positive before the report and is now trading in negative numbers, I don’t think you should a view Wall Street as being unhappy about the report, rather a buy on the rumor and sell on the news response.  This means that the market has moved nicely higher recently expecting a good report which they got and now they take their profits and hie to the sidelines.  One possible fly in the ointment going forward is the high price of oil and gasoline at the pump, if oil stays high, this crimps the profit margins of companies and may prevent them from hiring.  This also cuts into the spending of consumers as more money is going to gasoline and less in spending.  As much as our economy is 2/3 dependant on consumer spending, then we should be a little concerned if oil stays high and slows down the expansion we are seeing now.  

Pre-Jobs report commentary

I have been commenting publicly the last few months about the probability that there is going to a blockbuster jobs report that will surprise everyone on the upside and that is what I want to talk about today.  As my regular blog readers know, we have seen very disappointing jobs reports the last two months, not because they didn’t create jobs because they did but because they were not close to the expectation of jobs created.  In both cases it was dismissed as related to bad weather and seasonal factors, all of which could be true, but I have another take on it.  I believe that companies are not hiring because they have discovered that they can operate with less and still do fine.  Just look at the stock market over the last year and you will see it has gone consistently up and shareholders have loved this.  This won’t last forever and as I have mentioned earlier, at some point this year, employers will realize they can’t work their existing employees any harder even if they pay them more.  At that point they have to hire in order to grow and there is not a company who doesn’t want to grow.  Do you know of a company that just wants to stay the same size forever, because I don’t.      Maybe this turning point in the hiring process becomes evident tomorrow.  I say this because one of the important data points I watch  is the weekly jobless claims which have been trending down for months now.  Also look at the ADP jobs number which measures their own payroll clients to gauge the hiring picture and that has shown greater hiring, just look at this week’s number which was up 217,000.  There is not a perfect correlation between the ADP number and the government’s number especially in the short run, but over time is smoothes out and seems to track each other pretty well. Another data point is the manufacturing sector which this week reported a reading of 61.4 and non-manufacturing came in at 59.7 today.  A reading above 50 in both case represents growth in that sector .  Take all this together and you get a picture of an economy that is expanding not contracting and that has to be good for the labor market.  The consensus for tomorrow’s jobs number is +215,000 with the possibility that the unemployment rate will ratchet up to 9.3%.  This is  because more people are re-entering the job market thereby increasing the rate.  I would not be surprised to see the number as high as +275,000 and the unemployment rate back in the mid 9s.

New credit card rules may affect full-time moms - ksl.com

New credit card rules may affect full-time moms - ksl.com