Nonfarm Payroll Up 151,000 in Oct. Rate at 9.6%

[MadMarketScientist 11]

There's some irony here just days after the election was primarily decided on jobs growth - or the lack thereof:

 

The labor market showed signed of improvement in October, data from the Labor Department showed Friday. Total non-farm payrolls rose by 151,000 in October, higher than the 70,000 gain expected by Wall Street economists. The unemployment rate held steady at 9.6% for the third straight month. Economists forecast the unemployment rate to rise to 9.7%. The payrolls count in August and September was revised higher by a cumulative 110,000. Payrolls fell a revised 1,000 in August and by 41,000 in September. There were strong upward revisions to job creation in the past two months. Average hourly earnings increased 5 cents, or 0.2% to $22.73. Economists had been expecting a 0.2% gain. Earnings are up 1.7% in the past year. The average workweek rose 6 minutes to 34.3 hours.

[thalestrader 14]

There's some irony here just days after the election was primarily decided on jobs growth - or the lack thereof...

 

I own a business that provides services to both residential and commercial customers, i.e. to both consumers and businesses. Business conditions started to improve during the middle of the Summer 2009, and really picked up during Q1 and Q2 2010 through June 2010. Sales in July through September were slower than I would have anticipated based upon the Spring activity, but October and (thus far) November has been outstanding. Interestingly, the market topped in April and a few months later, business conditions deteriorated, albeit only slightly. Market bottomed in July, and two months later, business conditions started to improve and sales are now back to levels not seen since pre-Q4 2008.

 

Also of note is the fact that while my business is 75% consumer and 25% business customers, the largest part of our improvement from mid-summer 2009 through Spring 2010 was on our residential side, i.e. consumer customers. However, since early September, our commercial lines have really taken off, and given current bookings, Q42010 looks to be our strongest quarter for commercial business ever. I myself am not a fan of working Sundays, but tomorrow will be my first whole day off since Sunday October 10th.

 

Also of interest to some may be this: We stopped taking credit cards in 2008 when banks started to boost our fees for merchant services, thus cutting into our gross margins at a time where I found it unreasonable to pass these costs through to our customers. To this day, we have lost not one customer on account of our no longer accepting credit cards. I tentatively conclude that the much written about "death of the consumer" based upon debt-overload is exaggerated. Those who are solvent can and do pay cash (and do so happily). Those who are not or were not solvent are passing through or have passed through bankruptcy and will soon be or now are solvent and able to pay cash (and do so happily).

 

If I were a betting man, and if I were to try to translate what I am seeing as a business owner to what I should be expecting as a trader, my guess is that this bull snorts and stomps and runs until early 2012 and tops out with the S&P's somewhere around 1600.

 

I doubt we shall ever see the 2009 lows again, at least not in my lifetime.

 

Given The Consumer's new found disdain for banks in general and bank credit in particular, I'd expect financial services to lag this bull market. I think the whole world will soon witness just how strong the US consumer can be when operating from a cash basis.

 

And have no doubt about it - this is undeniably a bull market.

 

Best Wishes,

 

Thales

[MadMarketScientist 11]

Very interesting analysis in particular since it's "from the field" rather than all hypothetical.

 

In my other business have seen something similar -- there has been a creep back of confidence -- maybe just the result of the fact that the bottoming has appeared in for a while and a little stability goes a long way. It certainly doesn't feel like we're back to rampant speculation on the part of anyone (which can be fun:) but there is clearly more than a toe stepping back into the water.

 

The holiday season is key -- I have heard some reports through some distribution channels that it seemed to start a little slower than expect but I feel there's a long way to go and shoppers are now programmed to wait on the deals since these days they are so easy to find/get with the internet. Expecting a definite increase from last year which would keep momentum going into 2011.