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U.S. Jobs "Confidence" Report

12/02/2011
As I often mention, success is rather difficult to achieve in an environment absent of confidence. The 2011 capital markets have been hamstrung by exactly that – a crisis in confidence.
 
This morning the Labor Department released its payroll report for the month of November. As is normal, economists and traders will dig into the numbers to truly gauge the internals. The internals suggest a modest improvement in labor conditions, nothing major.  However, Main Street U.S.A and the various media outlets that report to it will focus on one thing – the decline in the unemployment rate.
 
The coordinated efforts of global central banks this week suggest an understanding that Europe is everyone’s problem. Combined with the fall in the unemployment rate from 9% to 8.6%, we are presented with the most positive economic news the mainstream media has had to report in over 18 months. I expect the result will be a much needed uptick in Main Street confidence.
 
The focus now shifts to D.C.’s ability to extend the expiring payroll tax cuts and emergency unemployment benefits. I expect our friends in D.C. will feel some pressure to get this done in a bi-partisan fashion. In light of the positive European efforts and favorable market performance, D.C. has lost its cover of blame for a market sell-off driven by its inaction.  If this week’s 7-plus percent rally reverses, “it’s on you, President Obama and Speaker Boehner.”
 
Let’s take a look at the November labor report:
 
•         Unemployment rate declined from 9.0% to 8.6%, the lowest level since March 2009
•         Overall jobs increased 120,000, meeting consensus estimate
•         Private jobs increased 140,000, meeting consensus estimate
•         October’s headline jobs number was revised higher, from +80,000 to +100,000
•         October’s private payroll number was revised higher, from +104,000 to +117.000
•         Underemployment rate declined from 16.2% to 15.6%
•         315,000 Americans left the labor force, contributing significantly to the rate decline
•         Factory jobs increased 2,000, less than the 9,000 estimate
•         Service jobs increased 126,000 as retailers hired ahead of the holiday season
•         Government jobs decreased 20,000
•         Construction jobs decreased 12,000
•         The number of Americans unemployed for 27 weeks or more increased, from 42.4% to 43%
 
By the way, how is the formulation of your 2012 strategy evolving?

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