Was ?Mother Nature? To Blame For Poor Employment Data?
Today’s Spotlight Market
Although most media reports will focus on the disappointing 113,000 increase in U.S. Non-farm payrolls in January, many years of following the markets and the reaction to the monthly employment report has taught us that it is more important to focus on the ?details? of the report.
The Labor Department?s annual benchmark revision was reported on Friday, and here we saw some good news, as U.S. payrolls were adjusted upward by 369,000 jobs from April 2012 through March 2013. The important construction sector added 48,000 jobs in January, vs. a loss of 22,000 in December. This increase is even more impressive given the brutal winter weather seen in a large section of the U.S last month.?
Even the broader measure of the labor market, the so-called ?U6? unemployment rate, which includes ?marginally attached? and ?discouraged workers? as well as those working part-time who would prefer full time employment fell by 0.4% to 12.7% in January and is well below the 14.4% reading this time last year. Just like it is important ?not to judge a book by its cover? it may be equally important not to ?evaluate an economic report by its headline?!
Fundamentals
It was a wild ride for financial futures traders Friday morning, after the release of the always highly anticipated Non-farm Payrolls report. Just like in December, analysts and traders were way more optimistic than Labor Department statisticians, as January payrolls rose by a lower than expected 113,000 jobs. The unemployment rate fell by 0.1% to 6.6%, as the labor participation rate rose to 63.0%, vs. 62.8% in December.?
Although the ?headline? numbers were viewed as a disappointment, especially after a weak December report, we should note that the November and December employment ?revisions? showed an increase of 34,000 jobs combined.? A brutally cold and snowy winter in much of the U.S. is being blamed for the weak jobs figures, with Dallas Federal Reserve Bank President Richard Fisher stating that the harsh winter seen so far this year would have an impact on the economy.
Traders were unsure how to treat Friday?s numbers as seen by the wide price swings, but up and down in stock indices and Bond futures after the report was released. However, it does appear that the Federal Reserve may not be swayed from altering their continued tapering of Bond purchases on the basis of the last two employment reports, as Fed governors will wish to see further evidence of a change in the U.S. economic growth from other indicators that are not being affected by the wrath of ?Mother Nature?.? ?
Technical Notes? -? View Today’s Chart
Looking at the daily continuation chart for the mini-Dow futures (symbol YM), we notice the tough start to 2014, as the index is currently down about 900 points from the last days of 2013.
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After a brief move below the 200-day moving average (MA), the index has rebounded from oversold levels, as measured by readings below 30 on the 14-day RSI, but still remains below the short-term 20-day MA by nearly 300 points. Volume has been declining on the recent recovery, which is not a good sign for continued strength. Support is found at the recent low of 15276, with resistance found at 15983.
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