Finance Matters

Posts Tagged ‘unemployment rate’

From UBS’ Maury N. Harris:

The surge in payrolls in January provides further evidence that a virtuous cycle of economic activity is beginning to take hold. We have increased our outlook for Q1 2012 real GDP growth to 2.3% from 1.5%.

This is a function of increased consumer spending emanating from pent-up demand and a better labor market and credit conditions. It also reflects expectations that Federal government spending will rebound after plunging in Q4 2011. Risks remain: Europe has n.ot been “solved”. Faster growth and the recent rapid decline in labor force participation have caused us to revised down our estimate for the unemployment rate by year-end: we now expect a 7.9% rate versus our previous estimate of 8.6%.

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Great news for Obama and the economy from a new ABC/WaPo poll:

Fifty percent of Americans in this new ABC News/Washington Post poll approve of Obama’s job performance, the most since spring. Fifty percent say he deserves re-election, better than Bill Clinton at the start of his re-election year and as good as George W. Bush a month before he won a second term. And Obama now leads Romney among registered voters by a slight 51-45 percent, the first time either has cracked 50 percent in a series of matchups since spring.

Two chief factors are at play. One is the economy’s gradual but unmistakable improvement, marked by the newly reported January unemployment rate of 8.3 percent, the lowest since a month after Obama took office. The president’s approval rating on handling the economy, while just 44 percent, is its best in 13 months.

Right now there’s clearly a positive cycle of developments for Obama, between the economic news and the stock market, and they’re combining to produce good vibes for him right now.

But as we pointed out on Friday, since Obama’s approval is so closely tied to the market, there’s a pretty big opportunity for the market to torpedo him before November.

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Today was a huge day for the economy. U.S. companies added 243k jobs in January and the unemployment rate fell to 8.3%.

This fueled a major surge in the stock markets, which hit some major milestones.  Both the Dow Jones Industrial Average and the Nasdaq hit pre-financial crisis levels.  The Dow closed at 12,862, a 4-year high, and the Nasdaq jumped to 2,905, an 11-year high.

The S&P 500, which is arguably the best snapshot of the U.S. stock markets, hit 1,344, a 6-month high.

Here’s a look at some historical charts courtesy of Yahoo Finance.

 

 

SEE ALSO: Wall Street’s Sharpest Minds Predict Where Stocks Are Headed In 2012 >

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• European Markets Are In Total Melt-Up Mode To Start The New Month

THE JANUARY JOBS REPORT WAS A MEGA BEAT.

243K new jobs were created in January. That’s well above the expectations of just 140K new jobs.

And it’s even more impressive, since so many people expected it was going to be a miss.

The unemployment rate has fallen to 8.3% from 8.5%.

Past reports were revised UPWARD, which was crucial..

Just about every sub-number was great as well.

Hours worked is up to 34.5 per week.

Manufacturing grew jobs by 50K vs. expectations of just 13K.

The public sector only shedded 14K vs expectations of a 20K decline.

The market is rallying. Dow futures up over 120.

Again, what’s key is that people went into this thinking we might get a miss, so this is great to see by every measure.

The full announcement is here.

Here’s a key chunk….

Total nonfarm payroll employment rose by 243,000 in January. Private-
sector employment grew by 257,000, with the largest employment gains
in professional and business services, leisure and hospitality, and
manufacturing. Government employment was little changed over the
month. (See table B-1.)

Professional and business services continued to add jobs in January
(+70,000). About half of the increase occurred in employment services
(+33,000). Job gains also occurred in accounting and bookkeeping
(+13,000) and in architectural and engineering services (+7,000).

Over the month, employment in leisure and hospitality increased by
44,000, primarily in food services and drinking places (+33,000).
Since a recent low in February 2010, food services has added 487,000
jobs.

In January, health care employment continued to grow (+31,000). Within
the industry, hospitals and ambulatory care services each added 13,000
jobs.

Wholesale trade employment increased by 14,000 over the month. Since a
recent employment low in May 2010, wholesale trade has added 144,000
jobs.

Employment in retail trade continued to trend up in January. Job gains
in department stores (+19,000), health and personal care stores
(+7,000), and automobile dealers (+7,000) were partially offset by
losses in clothing and clothing accessory stores (-14,000). Since an
employment trough in December 2009, retail trade has added 390,000
jobs.

In January, employment in information declined by 13,000, including a
loss of 8,000 jobs in the motion picture and sound recording industry.

In the goods-producing sector, manufacturing added 50,000 jobs. Nearly
all of the increase occurred in durable goods manufacturing, with job
growth in fabricated metal products (+11,000), machinery (+11,000),
and motor vehicles and parts (+8,000). Durable goods manufacturing has
added 418,000 jobs over the past 2 years.

Employment in construction increased by 21,000 in January, following a
gain of 31,000 in the previous month. Over the past 2 months,
nonresidential specialty trade contractors added 30,000 jobs.

Mining added 10,000 jobs in January, with most of the gain in support
activities for mining (+8,000). Since a recent low in October 2009,
mining employment has expanded by 172,000.

Government employment changed little in January. Over the past 12
months, the sector has lost 276,000 jobs, with declines in local
government; state government, excluding education; and the U.S. Postal
Service.

The average workweek for all employees on private nonfarm payrolls was
unchanged in January. The manufacturing workweek increased by 0.3 hour
to 40.9 hours, and factory overtime increased by 0.1 hour to 3.4
hours. The average workweek for production and nonsupervisory
employees on private nonfarm payrolls edged up by 0.1 hour to 33.8
hours. (See tables B-2 and B-7.)

In January, average hourly earnings for all employees on private
nonfarm payrolls rose by 4 cents, or 0.2 percent, to $23.29. Over the
past 12 months, average hourly earnings have increased by 1.9 percent.
In January, average hourly earnings of private-sector production and
nonsupervisory employees edged up by 2 cents, or 0.1 percent, to
$19.62. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for November was
revised from +100,000 to +157,000, and the change for December was
revised from +200,000 to +203,000. Monthly revisions result from
additional sample reports and the monthly recalculation of seasonal
factors. The annual benchmark process also contributed to these
revisions.

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In fits and starts, the unemployment rate has steadily declined to its current 8.5 percent mark since peaking at 10 percent in October 2009.

Philadelphia Fed president Charles Plosser believes the figure will only improve, and could hit 8% by the end of the year.

In remarks to a local chamber of commerce today, Plosser observed that the unemployment rate fell nearly a full percentage point between Fall 2010 and Winter 2011. The last time unemployment fell at such a rate, he said, was in 1995.

“As growth continues and strengthens, I expect further gradual declines in the unemployment rate,” he said.

He also projected inflation to remain under control, pointing to tempered growth in commodity prices compared to a year ago.

Finally, he said he disagreed with the Fed’s decision to formally announce zero percent interest rates through 2014, given what he sees as improving conditions and the diminishing risk of a double-dip recession. Such a move, he said, undermines confidence in monetary policy.

SEE ALSO: THE NOSTRADAMUS AWARDS: The Best And Worst Economists Of 2011 >

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