Regular readers of FullyInformed.com know that I use the Weekly Initial Unemployment Insurance Claims and the monthly unemployment report as a market timing system. This market timing system has a proven track record which I have benefited from for years. For anyone unaware of this system you can read how this market timing system works through this link. You can also review all the market timing articles through this index and finally, you can review all the weekly unemployment market timing system through this category.
August Unemployment Report Disappoints
The August unemployment report showed the slowest monthly gains this year. Most analysts had picked 220,000 for the unemployment report for August and with stronger than expected ISM numbers, among others, it is not surprising that the 142,000 jobs reported for August surprised most. It is the poorest jobs report so far this year and it helped to push stocks lower in the morning.
June July Revised Lower
As well June and July were revised lower by a total of 28,000, but even with the revision down, June and July were strong months when compared to August.
The overall unemployment rate changed to 6.1% which is now at a 6 year low.
Labor Force Participation Rate
The labor force participation rate dipped only slightly to 62.8% which is still the lowest level in 26 years, but showed a slight increase in the number of people no longer seeking employment as last month the participation rate was at 62.9%.
However the large numbers of “baby-boomers” now leaving the workforce is also having an impact of the participation rate. Until they retire out of the labor force completely the participation rate may be skewed somewhat.
Best 6 Months Since 2006
The August report of just 142,000 jobs ends the best 6 month job growth since 2006 with every month adding a minimum of 200,000 jobs.
Market Timing Signals Based On Unemployment
In general though, the figures we were handed this morning will change probably next month. As well the employment report shows that almost all sectors of the economy are adding jobs and manufacturing is continuing to grow employment numbers pa0rticularly in cars, trucks and airplane manufacturing and tertiary businesses.
More executives say they plan to increase hiring over the next year in anticipation of continued sales growth and the number of people who cannot find more than part-time jobs declined slightly.
Lastly, the country is still on track to generate at least 2.6 million jobs in 2014 which will mark the best year since before the Financial Credit Crisis and Bear Market of 2007 to 2009.
Market Direction Outlook Then Is…
We will need to see further jobs reports to determine whether August was just a “blip” on the employment front. Right now all other statistics points to the economy continuing to expand. That said, today’s jobs numbers may give the Fed room to pause on the interest rate increase time-table which as we all know is still up-in-the-air.
There are no signs in the latest unemployment report that gives reason for concern. Instead all signs point to stocks as still being among the better places to invest which is exactly what I will continue to be doing.
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