The Independent Market Observer

Will We Hit 200K? A Prospective Look at the Employment Numbers

Posted by Brad McMillan, CFA®, CFP®

Find me on:

This entry was posted on Jun 6, 2014 10:18:00 AM

and tagged Employment

Leave a comment

Employment_5This is a bit of a speculative post, as I’m writing it a day ahead of time, before the next set of employment numbers comes out. (I’ll be on a plane to Norway for a family vacation when they do.) I may have to revise or retract some of my thoughts here, but hopefully the main points will survive.

Employment: no longer our most pressing concern?

As I mentioned yesterday, employment is the major issue in Europe, and it’s still perceived to be the primary problem in the U.S. I think we’re moving past that, however, and I expect the jobs numbers to confirm it. Let’s take a look at where we are now:

employment numbers

There are two parts to any recovery: posting job gains, and doing so consistently. You can see that gains are, on average, at about the levels of the mid-2000s right now, but they’ve become much more consistent, which is a good thing.

Another factor is how sustained the level of job growth is. On this front, the new data will be telling. If the number comes in above 200,000, it will be the first time since 1999—that’s 15 years—that we’ve seen four straight months of 200,000-plus employment growth. Even if the number comes close, it’s still a good sign. The growing but consistent level of new jobs is a significant positive indicator. We’re not where we need to be, but we continue to move in that direction.

Other indicators suggest that job growth should be in the 200,000 range. Initial jobless claims ticked up a bit this week, but they’re still at very low levels based on recent history. The ADP job creation figure came in somewhat light, but again, at a level that suggests 200K is quite realistic. Our economic consulting service, Capital Economics, estimates job growth at 230K.

And now, off to Norway

In addition to being Gadget Girl, my wife, Nora, is also Travel Girl. We went to Amsterdam last year, and it’s Norway this year. She does all of the planning, and I just go along for the ride, so it works out very well for me. Plus, given the ECB’s bold move yesterday, it's an opportune time to see firsthand what’s happening in Europe. (So far, though, I haven’t tried to expense the trip!)

Depending on the actual employment figures, I may revisit this post on Monday. I’ve already filed a couple of posts for next week, and plan to write one or two while I’m away, but I might end up skipping a day if nothing really warrants comment. I have fjords to see, after all.

Hope everyone has as great a week as I plan to!

Subscribe via Email

Crash-Test Investing

Hot Topics



New Call-to-action

Conversations

Archives

see all

Subscribe


Disclosure

The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.

The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.

Member FINRASIPC

Please review our Terms of Use

Commonwealth Financial Network®