April 6, 2007
GOOD FRIDAY AND OPEN QUESTIONS
If an employment report is released in the forest, does it make an impact?
Today's update on job creation for March arrived when much of Wall Street is on holiday, courtesy of Good Friday. The stock market is closed in the U.S., although government bond trading is open for an abbreviated session. Whether or not anyone's paying attention, the Labor Department advised that nonfarm payrolls jumped by 180,000. Meanwhile, unemployment dropped to 4.4%, the lowest since last October.
Does the number of new jobs created inspire confidence on the economy? Fear of inflation? Both? Neither? Whatever the answer, it's certainly an improvement over February's tally, which rolled in at a gain of only 113,000 new jobs. In fact, March's rise in payrolls by 180,000 is the highest since December's 226,000. But even a determined optimist has to admit that last month's pace of job creation is no better than middling relative to recent history, as our chart below shows.
Our conclusion doesn't change when we consider the longer perspective for job growth on a 12-month rolling percentage basis. As the second graph shows, the pace of minting employment opportunities remains dramatically improved from the 2002-04 period, but the economy's now off its peak from the gains of more recent vintage.
So, what do investors think of the news? We'll have to wait until Monday for reactions from the equity realm. Meanwhile, the truncated trading day in the 10-year Treasury, as of mid-morning, revealed a touch of anxiety, with the yield rising to 4.75% from yesterday's close of 4.67%.
And so, as we head into the weekend, there's fresh questions to ponder, starting with: Will Good Friday end up being a good Friday for the bulls next week? A robust answer will have to wait. In the meantime, off-exchange speculation reigns supreme this weekend.
Posted by jp at April 6, 2007 11:15 AM
"If an employment report is released in the forest, does it make an impact?"
I was going to use the exact same saying on my blog to talk about how the USD really moved on the back off this report ... try telling fx traders it's a holiday!
Posted by: Caravaggio at April 6, 2007 3:38 PM