Yesterday's Job Report was heralded by the bad news that the rate of unemployment increased from 8.8% to 9%. That's bad news, right? Not really, because people re-entered the job force to look for work, creating a bigger labor pool. That's actually good news, because the economy is creating jobs, and they see it. I've been writing for over a year that the unemployment rate will get higher before it starts to drop.
Even better news, most of these new jobs are being created by business, not government. In fact, this was the largest increase in private jobs in over 5 years. That's good news, right? Not really, because a large number of those jobs were the low skill, low pay, dead-end type. For example, McDonald's hired 69 thousand workers. Of course, one can argue that there must be a good reason McDonald's hired so many people. They obviously see business improving.
Another good sign in yesterday's report was that the Department of Labor said they made a mistake last month and under-reported the number of jobs created in March, significantly under-reported them. That's good news, right? Yes, that is indeed some good news!
The stock market rallied strongly on this report but gave back much of the gains by late afternoon.
Bottom Line: The economy continues to improve, albeit slowly. The stock market continues to improve, although erratically. The economy has shown a little weakening over the last few months, but it will not go back into recession. The stock market remains vulnerable to another heart attack, as long as derivatives control it, but that is below the headline . . . way below.
