Show Me The Jobs!
While the economy has definitely shown signs of life this year, no one expected the April jobs report to be such a shock. In fact, when I first saw the jobs number, I actually thought it was a misprint!
Here’s the deal…
Last months’ jobs report showed a 288,000 gain in employment. That’s a huge jump over the prior month’s 203,000 gain. And, it’s well above the median prediction of 218,000.
It’s also the biggest monthly gain since January 2012. Clearly, it’s big news for the labor market and the economy in general.
At the same time, unemployment dropped to 6.3%. It’s at the lowest level since September 2008, prior to the Lehman Brothers collapse (which officially sent the economy down the toilet).
However, I don’t think the unemployment number is nearly as significant as the jobs gained. You see, unemployment dropped significantly because so many people have been dropping out of the job hunt.
There’s a lack of demand from companies – or a lack of supply, if you will. That’s one reason the Fed is choosing to focus more on inflation rather than the unemployment number.
Still, we shouldn’t discount the good news. After all, 288,000 is a lot of jobs created. Yes, to some extent, this is something of a make-up from the lack of hiring during the harsh winter.
However, there was no guarantee companies would pick up the slack. And, the increase in jobs also comes at a time when consumer spending and personal incomes are ticking higher.
Basically, there are plenty of reasons to believe the economy has shifted into a higher gear.
We’ll need to see another couple months of hiring growth to prove it’s for real. But, as I mentioned, there are good reasons to be optimistic.
Now, we just have to hope international risks don’t spiral out of control, and we may actually get back to pre-recession levels of economic growth for good. Regardless, it definitely appears that the darkest days are well behind us.
Yours in Profit,
Gordon Lewis
Category: Stocks
