This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Jobs Figure: Worse Than the Headline Number

NEW YORK ( TheStreet) -- Last week's main event for U.S. equity markets was the monthly Non Farm Payrolls report, which showed the economy added 169,000 new jobs for the period. This missed the market's consensus estimates of 180,000 but selling pressure in the S&P 500 was offset by a slight improvement in the unemployment rate, which dropped one tick to 7.3%.

This is the lowest level since December 2008. But when we look at the details of the jobs report, some added negatives can be seen. The implications here could be massive, as this essentially indicates the Federal Reserve will have less room to maneuver policy, and begin tapering stimulus programs at its September meeting.

In addition to the miss in the headline payrolls number, figures from the previous two months saw large revisions lower -- with a combined reduction of -74,000 jobs for June and July. The six-month payrolls average is now 160,000 and the real question here is whether or not the Fed feels the economy is in a position to run on its own if less stimulus is pumped into the system.

The unemployment rate is the Fed's preferred metric for making these assessments, but this month's improvements were driven by reductions in the labor force. The participation rate (the number of working-age people in the labor market) dropped to 63%, which is the lowest level since 1978.

Stimulus Prospects

Since a larger number of people have simply given up on finding new jobs, it is clear that consumer confidence should see renewed weakness into the final months of the year. Consumer spending accounts for almost three-quarters of the U.S. economy, so there is little reason for optimism in the latest employment figures.

Other aspects of the economy are looking less dismal, however, with manufacturing productivity and the housing market being key points of strength. Last month's ISM manufacturing data rose to its highest levels in two years, with the service sector expanding at its fastest rate in nearly eight years.

For most of the market, the question is not whether the Fed will start implementing its exit strategy for quantitative easing in September, but by how much. Taken in combination, macro data point to a mixed outlook that favors small reductions in monthly asset purchases over larger ones.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.24 -0.41%
FB $117.81 -0.21%
GOOG $701.43 0.82%
TSLA $211.53 -4.96%
YHOO $36.94 2.61%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs