Jobs Friday Ugly, but Don't Run for Cover

by Jay Pestrichelli on May 4th, 2012

The street was clearly disappointed by the jobs number this morning. As this is bring written, the SPX is down 1.4%, and rightfully so. This was the worst jobs report since October 2011 that reported only 100k growth compared to this one that reported 115k growth and is the 3rd consecutive decline in growth. Although revisions were somewhat positive, they still weren’t much to applaud. See chart below.
A few areas of concern were Manufacturing that only gained 16k compared to 30k and 40k the prior two months and Transportation that lost 17k jobs compared to the last 8 months that added jobs to the sector.

The bright spots again this month were in Retail and Healthcare. Retail added 29k compared to the previous two months that lost jobs from the holiday season.

Healthcare added 23k, but it was less than the 45k and 70k it added the prior two months.
While this wasn’t a resounding report, lets remember that the jobs data is considered a lagging indicator. CEO’s are usually hesitant to hire until their business is bursting at the seams and they HAVE to add staff to keep up with demand. This is very different than R&D spend or investments in technology that will lead growth. Stay bullish and as we’ve said the last few weeks, the market is looking for an excuse to sell off as the profit takers are likely to cash in on the last 2 quarters of strong market gains.

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