Jobs Report Shows Roots of Recovery - TheStreet

Jobs Report Shows Roots of Recovery

Drilling down into today's jobs report reveals some industries are getting stronger.
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NEW YORK (TheStreet) -- The U.S. unemployment rate, which plunged to 9.7% last month from 10% in December, appears to be a bullish signal for investors after the stock market fell apart in the past few days.

However, the jobless rate, which now stands at a five-month low, is deceiving. The economy shed 20,000 jobs as the goods-producing and construction industries were hardest hit, losing 60,000 and 75,000 jobs, respectively. An increasing number of people gave up looking for full-time work, lowering the country's base workforce.

Still, some industries reported encouraging trends. Manufacturing added 11,000 jobs, a good sign as it indicates that production is ramping up as companies replenish their inventories. The service industry, the largest part of the economy, created 48,000 jobs. While people are getting discouraged by the sluggish economy, the seeds of a recovery may be starting to sprout.

Other glimmers of hope come from anecdotal evidence of a recovery.

Cisco Systems

(CSCO) - Get Report

said this week it plans to hire thousands of employees in the coming quarters. While this does little good for those exhausting unemployment benefits, it suggests the turn may be coming.

Even though this decrease in unemployment offers no real relief, investors should concentrate on the nuts and bolts of the report when making investing decisions. While the situation today may not be sunny, the job-market turnaround is getting closer. The increase in manufacturing jobs comes after the sector lost 210,000 jobs since the end of the summer, so any increase is refreshing.

The stock-market selloff yesterday was a result of great amounts of fear about the economy. Today's report does little to settle the stomach of nervous investors, but those with a longer time horizon should focus on the positive.

-- Reported by David MacDougall in Boston.

Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.