A Not-So-Good Friday

by Jay Pestrichelli on April 9th, 2012

Friday’s job report disappointed expectations with an addition of only 120k vs the expectation of 203k. While it is still early to determine how badly this will impact equities at the open Monday, the futures Friday morning took a hit to the tune of more than 1%.

Revisions were light with small adjustments for January and February.
Despite the sour reaction in the market, the unemployment percentage dropped by 0.1% to 8.2%. But where did the miss come against expectations come from? The answer is Private Service Providers. For the previous two months this subsector grew by 199k and 204k, but in March, it only added 90k jobs.

The big swing here was made up mostly from retail that lost 34k jobs in March. Add to that that the biggest revision to February’s was also in retail as it went from a change -7k to -29k. In other words, between February and March, retail has lost 63k jobs.

While these are supposed to be seasonally adjusted numbers, no one should be too surprised about the post Christmas fall off. Last year retail jobs dropped by more than 400k from December 2010 to March 2011. Compare that to the change this season of only 38k from Dec 2011 to Mar 2012.

Many investors have been counting on good retail numbers due to the mild winter, and it appears employers may be doing the same by keeping more of their staff.
Strength continued from Manufacturing, Healthcare and Food services. Manufacturing continued to add jobs posting an additional 37k with most coming from transportation and motor vehicle segments. Healthcare continued to added 37k jobs and Food Services grew by 38k.

A slight surprise seen in Finance that has started showing some signs of growth adding 15k jobs, most of which came from banking related services vs. insurance or investments.

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