No Excess in Labor Market
While reasons for more interest rate hikes are mounting in the eyes of some central bank officials, they certainly aren't evident in the labor market.
Although job growth is expected to have picked up in December from a sluggish pace in the prior month, the upcoming employment report is likely to be mediocre at best.
On average, economists are predicting that 175,000 new jobs were created last month, after 112,000 were added in November. About 150,000 jobs are needed each month just to keep up with the growth in the labor force.
Vincent Boberski, senior economist at RBC Dain Rauscher, thinks the consensus estimates are overstated by about 45,000, saying the deceleration in corporate profits is making managers leery about hiring."The markets should begin to see more evidence of that emerging caution over the next month or so as companies report for the fourth quarter, and we should see it reflected in Friday's payroll report," he said. Thomson First Call predicts that corporate earnings will rise 15% in the fourth quarter, down from almost 17% in the third quarter and more than 20% in the first six months of 2004. Richard Yamarone, director of economic research at Argus Research, also believes that the pace of job creation has been uninspiring, with just 65,000 new jobs added to the payroll last month. "I started talking to a lot of people over Christmas saying we're not firing but we're not hiring either," he said. A number of private surveys seem to support that conclusion. The employment components of the Institute for Supply Management's manufacturing and nonmanufacturing surveys fell last month but remained in positive territory. Yamarone estimates that retailers added about 15,000 positions in December while the manufacturing sector shed about 20,000 jobs after 5,000 were lost in November.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV