November 2013 Employment Situation

the Employment Situation

Last Friday at 8:30 am est the Bureau of Labor Statistics of the Labor Department, as usual, released its monthly Employment Situation report.  It was another unexpectedly good set of figures.

Pundits had been offering a figure of around +180,000 new jobs added during the month.  Their theory apparently was that the recent government shutdown, the bungled launch of Obamacare (with its attendant display of White House ineptitude) and assorted small signs of business as usual in Washington would retard employment growth  …as well as that the strong October jobs was an aberration which would be corrected in November.

It’s hard to believe that Washington’s antics are a plus for jobs.  Still, it may be that business is reverting to what its default position has been for the 30+ years I’ve been watching US financial markets–that is, that Federal government policy is more or less background noise, annoying and sometimes harmful, but basically irrelevant to commerce.  Therefore, run your business and ignore political posturing.

I’m not saying this attitude is good or bad, right or wrong.  It seems to me that customers of both Wall Street and Main Street are saying that the economy is continuing to heal on its own.  But now, Wall Street is responding by bidding stocks higher; Main Street is adding more employees.

Anyway, the November numbers:

–The economy added +203,000 new jobs during the month.  Private industry added +196,000 new positions.  State and local governments chipped in +14,000.  The Federal government (excluding effects of the shutdown) subtracted 7,000 jobs.

–September jobs figures were revised up by +12,000 to +175,000; October numbers were revised down by -4,000 jobs to +200,000–meaning a net increase of +8,000 new positions.

–144.4 million people are employed in the civilian workplace.  That’s up by 0.7% year on year.  Hourly wages have risen by 2.0% to an average of $24.15.  The workweek has expended slightly.

The net result is that total civilian wages paid in the US have risen by 3% over the past year.  Given that inflation is running below 2% and that borrowing costs are extremely low, the figures seem to show that the real purchasing power of the workforce in the US is steadily increasing.

my take

What I find interesting is Wall Street’s reaction to a report showing economic strength–modest, yes, but still strength and at least as good as we’ve had in the recent past.

Stocks went up.

No perverse “good news is bad news” reaction.

I think this is a potentially important sign that even short-term traders see no benefit to reacting to any news as it were a sign of renewed economic crisis.  If that’s right, and Wall Street is returning to “normal,” then it will be safer to use historical patterns of market behavior to predict what’s likely to happen in 2014.  That’s good for us as investors.


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