March 5, 2010: Title Says It All
March 5th, 2010
A Reuters story about today’s BLS Employment Report sums up market sentiment quite well. The general theme for the past twelve months has been…..hope. The title of the Reuters story is, “U.S. Payrolls Data Buoy Job Creation Hopes.” The headline number came in at -36,000 jobs (est. was -50,000 jobs) with a 9.7% unemployment rate (est. was 9.8%). The media spent the day focused on the consistent rise in temporary jobs. The thesis is that all of those temporary jobs will become permanent at some point.
Why?
There truly was something for everyone in this report. For the bulls, February was the fifth consecutive month in which temporary employment grew; growing by 48,000 last month. Through the shallower-than-expected job loss (by a whopping 14,000 jobs), investors focused squarely on the long-standing idea that less-bad is not just good, but great news; as evidenced by the 1-2% rally in the major averages.
For the bears, more jobs were lost…period. Construction jobs fell by 64,000 in February. Also, involuntary part-time workers increased from 8.3 millon to 8.8 million in February. These workers are part-time because, according to BLS, their hours were cut (presumably) in order to keep their jobs or because they were unable to find full-time employment. This threat is not at all reflected in the market.
While the pace of job loss has certainly slowed, investors are increasingly betting that the recovery will not be jobless at all. Rather, bulish camp asserts, job growth will kick in any month now. Expectations are continuing the recent trajectory way above reality.
So far, the bulls are winning.
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