This week’s strong gains have been fueled by solid earnings and hope about the economy, and investors got another shot of optimism after the Senate approved a plan that will allow President Biden’s $1.9 trillion stimulus plan to pass regardless of the level of Republican support.
With its direct payments to Americans, investors have been hoping the stimulus will give consumer spending a shot in the arm and help boost the economic recovery while vaccines are becoming more
In economic news, the government’s non-farm payrolls number for January came in at 49,000 and the unemployment rate fell to 6.3% from 6.7%. However the Labor Participation rate also fell.
A Briefing.com consensus had expected a headline number of 50,000 new jobs and an unemployment rate of 6.7%. While the headline number was no big surprise, it still wasn’t anywhere near as good as numbers we saw last summer and fall.
Looking just at the headline number, it feels like a slight win for the labor market in its battle with the coronavirus, but it appears we’re far from out of the woods due to some disappointing aspects deeper in the data. For example, December job losses were even worse than thought, with the government revising that number down to 227,000 jobs lost vs. its original estimate of 140,000. November jobs growth was also revised lower. This could help explain why the government’s first estimate for Q4 gross domestic product growth was lower than some analysts had expected.
The fact that jobs gains remained pretty tepid in January could indicate that sluggish economic growth is continuing into Q1, though we won’t see the government’s Q1 GDP estimate for a few months. When GDP doesn’t grow strongly, it can ultimately wind up being reflected in company earnings.
On a more positive note, January job losses were far less dramatic for the leisure and hospitality sector than the nearly 500,000 losses seen there in December. Perhaps that means the lockdown effect is slowing a little. We’ll have to wait and see.
The bad news is that the construction, manufacturing, warehousing and transportation sectors either shed jobs in January or barely gained. That’s not a sign of health in the manufacturing economy. These are the areas where you’d like to see more robust jobs growth if the economy is coming back.
Digging into these numbers a bit more, the decline in transportation jobs probably reflects airline layoffs, while seasonal factors could play into construction job losses. Meanwhile, healthcare employment is down by more than 500,000 from a year ago, perhaps because of less demand for typical healthcare because of people staying home.
It’s important to remember that these are only a data drop from one snapshot in time. It can take a few reports for the trends to show up. It’s good to see the slight job growth in January after December’s disappointing showing. And again, this report looks a bit worse than it might have otherwise been due to the continued cratering of leisure and hospitality jobs.
Stock index futures remained higher in pre-market trading, perhaps indicating a day of further gains for the stock market. Despite the early strength today, investors may want to watch out for some pressure later in the session from profit-taking, especially at the end of what’s shaping up to be such a strong week.
Looking Up
Solid economic data took center stage yesterday as good news from the nation’s labor market and factories helped move stocks higher.
The weekly jobless claims number—which has been a closely watched barometer of economic health during the pandemic—was quite a bit better than expected. Initial claims came in at 779,000 when a Briefing.com consensus had expected 825,000. It was also encouraging to see that the prior week’s number revised down to 812,000 from 847,000.
The improvement in the labor market is a welcome sign, but nearly 780,000 new applications is above the pre-pandemic high of 695,000 and shows that the U.S. economy is far from out of the woods.
With that in mind, investors were probably thinking that the still-high number won’t dent the probability of another government stimulus effort with direct payments to Americans.
Data on factory orders were also better than forecast, with December orders rising 1.1% compared with a 0.7% consensus from Briefing.com. The prior month’s data also was revised higher, to 1.3% from 1%. A key measure of business spending found in the report—nondefense capital goods excluding aircraft— rose 0.7%.
One way to look at it is as a positive-signal feedback loop. When businesses are willing to spend more, it can indicate they have a more favorable outlook on the economy, which would be in line with recently upwardly-revised estimates for the global economy in 2021. Those upwardly-revised estimates can give businesses and consumers an added layer of confidence.
https://tickertape.tdameritrade.com/market-news/stock-market-jobs-report-18515
With its direct payments to Americans, investors have been hoping the stimulus will give consumer spending a shot in the arm and help boost the economic recovery while vaccines are becoming more
In economic news, the government’s non-farm payrolls number for January came in at 49,000 and the unemployment rate fell to 6.3% from 6.7%. However the Labor Participation rate also fell.
A Briefing.com consensus had expected a headline number of 50,000 new jobs and an unemployment rate of 6.7%. While the headline number was no big surprise, it still wasn’t anywhere near as good as numbers we saw last summer and fall.
Looking just at the headline number, it feels like a slight win for the labor market in its battle with the coronavirus, but it appears we’re far from out of the woods due to some disappointing aspects deeper in the data. For example, December job losses were even worse than thought, with the government revising that number down to 227,000 jobs lost vs. its original estimate of 140,000. November jobs growth was also revised lower. This could help explain why the government’s first estimate for Q4 gross domestic product growth was lower than some analysts had expected.
The fact that jobs gains remained pretty tepid in January could indicate that sluggish economic growth is continuing into Q1, though we won’t see the government’s Q1 GDP estimate for a few months. When GDP doesn’t grow strongly, it can ultimately wind up being reflected in company earnings.
On a more positive note, January job losses were far less dramatic for the leisure and hospitality sector than the nearly 500,000 losses seen there in December. Perhaps that means the lockdown effect is slowing a little. We’ll have to wait and see.
The bad news is that the construction, manufacturing, warehousing and transportation sectors either shed jobs in January or barely gained. That’s not a sign of health in the manufacturing economy. These are the areas where you’d like to see more robust jobs growth if the economy is coming back.
Digging into these numbers a bit more, the decline in transportation jobs probably reflects airline layoffs, while seasonal factors could play into construction job losses. Meanwhile, healthcare employment is down by more than 500,000 from a year ago, perhaps because of less demand for typical healthcare because of people staying home.
It’s important to remember that these are only a data drop from one snapshot in time. It can take a few reports for the trends to show up. It’s good to see the slight job growth in January after December’s disappointing showing. And again, this report looks a bit worse than it might have otherwise been due to the continued cratering of leisure and hospitality jobs.
Stock index futures remained higher in pre-market trading, perhaps indicating a day of further gains for the stock market. Despite the early strength today, investors may want to watch out for some pressure later in the session from profit-taking, especially at the end of what’s shaping up to be such a strong week.
Looking Up
Solid economic data took center stage yesterday as good news from the nation’s labor market and factories helped move stocks higher.
The weekly jobless claims number—which has been a closely watched barometer of economic health during the pandemic—was quite a bit better than expected. Initial claims came in at 779,000 when a Briefing.com consensus had expected 825,000. It was also encouraging to see that the prior week’s number revised down to 812,000 from 847,000.
The improvement in the labor market is a welcome sign, but nearly 780,000 new applications is above the pre-pandemic high of 695,000 and shows that the U.S. economy is far from out of the woods.
With that in mind, investors were probably thinking that the still-high number won’t dent the probability of another government stimulus effort with direct payments to Americans.
Data on factory orders were also better than forecast, with December orders rising 1.1% compared with a 0.7% consensus from Briefing.com. The prior month’s data also was revised higher, to 1.3% from 1%. A key measure of business spending found in the report—nondefense capital goods excluding aircraft— rose 0.7%.
One way to look at it is as a positive-signal feedback loop. When businesses are willing to spend more, it can indicate they have a more favorable outlook on the economy, which would be in line with recently upwardly-revised estimates for the global economy in 2021. Those upwardly-revised estimates can give businesses and consumers an added layer of confidence.
https://tickertape.tdameritrade.com/market-news/stock-market-jobs-report-18515