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Friday's Jobs Report Isn't as Ugly as It Seems


Remember that the jobs data is considered a lagging indicator.

The Street was clearly disappointed by the jobs number this morning. Earlier today, the SPX was down 1.4%, and rightfully so. This was the worst jobs report since October 2011, which reported only 100K growth, compared to this one, which reported 115K growth and is the third consecutive decline in growth. Although revisions were somewhat positive, they still weren't much to applaud. See the chart below.

A few areas of concern were manufacturing, which only gained 16K compared to 30K and 40K the prior two months, and transportation, which lost 17K jobs compared to the last eight months that added jobs to the sector.

The bright spots again this month were in retail and health care. Retail added 29K compared to the previous two months that lost jobs from the holiday season.

Health care added 23K, but that was less than the 45K and 70K the sector added the prior two months.

While this wasn't a resounding report, let's remember that the jobs data is considered a lagging indicator. CEOs are usually hesitant to hire until their business is bursting at the seams and they have to add staff to keep up with demand. This is very different than R&D spend or investments in technology that will lead growth. Stay bullish, and as we at Buy & Hedge have said the last few weeks, the market is looking for an excuse to sell off as the profit takers are likely to cash in on the last two quarters of strong market gains.

Editor's Note: For more from Jay Pestrichelli, go to Buy & Hedge ETF Strategies.
No positions in stocks mentioned.
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