THOUGHTS ON TODAY’S DATA
This morning’s data is likely to temper bullish investors heading into the jobs data on Friday. The Challenger Layoff report posted a sizable jump as layoff announcements spiked to 71,482 from 45,094 last month. We had been seeing steady improvement in the data over the last several months so this spike in new layoffs is unsettling for a market that is expecting job growth to return to the economy in the first quarter. The ADP employment report painted a similarly negative picture. ADP reported -22,000 for private payrolls.
The ISM services report came in below expectations at 50.5 vs an expected reading of 51. Return to growth is encouraging despite the small miss. The highlight in the data is the surge in new orders – something we also saw in Monday’s ISM manufacturing report. New orders jumped to 54.7 from last month’s reading of 52. The market appears to be overlooking the overall miss and pointing to the strong new orders figure as the most reliable leading indicator of future economic activity.
All in all this morning’s data was a bit of a mixed bag. We’re unlikely to see a blockbuster jobs number this Friday and that could actually be a good thing for equities as investors push back the inevitable rate increases. The weak jobs market remains a clear sign of the weak recovery, however.
The Challenger Layoff isn’t seasonally adjusted. January always seems a tick up due to post-holiday retail.
TPC Reply:
February 3rd, 2010 at 11:02 AM
yeah, can’t read too much into the month on month challenger reports. Nonetheless, the sum of the jobs data (claims, challenger, adp) don’t point to a strong gain in jobs and more likely another loss….
Aren’t we supposed to get the benchmark revisions on Friday as well?
Recovery? What recovery is that one then?
I am constantly surprised by the bullish sentiment here,but time will no doubt change that.
It’s a balance sheet recession, not a typical cyclical recession. The world has changed, the bubble has burst, and we’re not going back!
All readers owning stocks should sell now, the top was in last month, the only was is down, and down fast from here on in.
boatman Reply:
February 4th, 2010 at 9:49 AM
TPC is pretty balanced….the sunshine pumpers are mostly corporate stock broker types…investing OPM…..it’s inertia and rose colored glasses….same ones who have always wanted to rent our money & gamble with it….their idea of moving money out of the market is moving 10% when i can see it’s falling like a rock.
the party is over…..most of the gov’ts of the world are like the school teacher in the .5 million dollar house down the street from me right before they foreclosed on her…… all in in gold at the next market& gold low…when gold goes up as market goes down(decoupling), it’s off to the races….
4 yrs. from now i’ll stack mine up against the paperbugs…bring it on.
Hi TPC, what could be the impact to equities if Boomberg’s article correct? Feb. 3 (Bloomberg Multimedia) — The U.S. may lose 824,000 jobs when the government releases its annual revision to employment data on Feb. 5, showing the labor market was in worse shape during the recession than known at the time.
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