A smattering of analyst opinions courtesy of the WSJ:
- The U.S. labor market dodged a big fat snowball in February, managing to lose only 36,000 jobs despite a string of major snowstorms that blanketed the nation. When combined with an upward revision of 35,000 jobs to earlier months, the interpretation is not bad at all. –Eric Lascelles, TD Securities
- The “not at work due to bad weather” series contained in the household survey — our favorite proxy for weather-related influences on the payroll data — soared to 1.1 million in February. This is the highest February reading on record (the data stretch back 1976). And, for any month over the course of the last 28 years, it is surpassed only by the 1.9 million posted in January 1996 (the so-called “Storm of the Century”). We were expecting a reading closer to 650,000 in February and believed — based on some simple historical correlations — that this translated into about a 100,000 subtraction for February payroll employment. Thus, it appears that the subtraction was even larger than we had anticipated — perhaps as much as 150,000. –David Greenlaw, Morgan Stanley
- It is impossible to extract the economic signal from the weather-related noise in this report. However, there is plenty of evidence that the storms had a major impact on the labor market and, therefore, that this trend-like decline in jobs actually masks a significant increase in employment. –RDQ Economics
- The results in the household survey were impressive. After sliding from 10.0% in December to 9.7% in January, the unemployment rate held steady in February at 9.7%. Household employment rose by 308,000 in the month on top of January’s 784,000 surge (adjusted for population controls). The labor force increased similarly in February, rising by 342,000 (which is why the unemployment rate held steady). In any case, over the first two months of 2010, the household survey shows more than a million jobs created. In 2003 (and to some degree in prior cycles), household employment began to rise well before payrolls. So, the strong improvement seen in the household employment figures recently provides an encouraging sign that payroll employment will soon turn up decisively. –Michelle Girard, RBS
- The growth bulls will interpret the modest loss in jobs as a sign that if it had not been for the weather the economy would have added workers in February and yet the initial unemployment claims have clearly bottomed out at a very high level. The growth bulls will also look at the second consecutive month of rising household employment as a sign that smaller firms are beginning to add workers. Even though this may simply reflect self employed workers who have given up on finding a job and have decided to try and go it alone and see what they can find in service jobs. As such, the increase in household employment exactly matched the increase in the labor force. –Steven Ricchiuto, Mizuho Securities
- For the second consecutive month, the manufacturing sector (the most volatile) and the services sector (the biggest) both posted payroll gains, which is the first time in recent memory. That’s a sign that labor market stabilization is relatively broad based. We take heart in that news and continue to see slight consistent job growth beginning with April’s numbers. Keep in mind, however, that the return of jobs always occurs at a much slower pace than the loss of jobs, meaning that it’ll be until 2012 before we see what might be described as “strong” labor markets. –Guy LeBas, Janney Montgomery Scott
- Growth was also healthy Another big drop of 64,000 in the construction industry once again offset gains in private sector services (+42,000) and manufacturing (+1,000). The manufacturing gain was accompanied by a 9,000 upward revision to January to bring that month’s gain to 20,000. As a result, manufacturing payrolls now have the biggest back-to-back gains in four years. –David Resler, Nomura Global Economics
- If we dig down into the report, the data is a bit less encouraging. Notably, job growth continues to fairly concentrated. The construction sector lost another 64,000 jobs while manufacturing added just 1,000 jobs. Certainly the service sector added 42,000 jobs, but that was concentrated in temporary help services which added another 48,000 jobs and education and health services (+32,000). Over the last five months, temporary jobs have risen by 285,000 jobs. Outside of those areas, the service sector still appears to be fairly weak although for those retail inclined, Department stores added jobs for the second consecutive month. Our least favorite government institution, the Postal Service, shed another 9,000. –Dan Greenhaus, Miller Tabak
- Problems remain abundant in the labor market. Those marginally attached or working part time for economic reasons increased to 16.8%. Forty percent of unemployed workers face duration of unemployment that exceeds 27 weeks. While, workers are beginning to trickle back into the workforce it is entirely probable that the unemployment rate will move higher later this year as confidence in a modest recovery takes hold and individuals look to find suitable employment either by choice or because their unemployment benefits have been exhausted. –Joseph Brusuelas
- The March report should show solid growth, boosted by Census Bureau hiring, some payback for February’s weather effects, and stabilization in private payrolls. Still, job creation needs to accelerate over the next several months to complete the economy’s transition from recovery to a self-sustaining expansion. – Aaron Smith and Ryan Sweet, Moody’s Economy.com
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.