The stock market continued its roller-coaster ride last week, starting with two big down days, off a total of 573 Dow points, followed by a 386-point rise the next two days. After all that drama, the net change in the S&P 500 in the first four days of November was only 0.07 points! Positive third-quarter earnings helped, but it looks like a series of positive jobs reports released Wednesday, Thursday and Friday gave the market its major fuel for staging a strong midweek rally.
Stat of the Week: 1,006,000 New Jobs Last Quarter?
Friday’s revised payroll report revealed the creation of 342,000 new jobs in the three months from Aug. 1 to Oct. 31. The broader household jobs survey, released Wednesday, reported an astonishing total of 1,006,000 new jobs in the last three months, the strongest three-month surge since the boom year of 2006. The household survey gained 277,000 jobs in October alone, for the third straight monthly rise.
Apparently a lot of ingenious Americans are creating jobs or businesses at home in recent months.
The biggest news on the jobs front came Friday, when the Labor Department announced that payroll jobs rose by 80,000 in October, while the jobless rate dropped a notch from 9.1% to 9.0%. The private sector did even better. Since the government shed 24,000 jobs in October, the private sector created 104,000 jobs in October, in line with the 110,000 private-sector jobs announced in October’s ADP payroll report.
Friday’s payroll report had some hidden gems in it, since the Labor Department revised the previous two months’ job totals significantly higher (up by a net 102,000 jobs). September was revised up to 158,000 new jobs from an initial estimate of 103,000 jobs, while August was revised up to 104,000 from 57,000.
The other good news on the job front last week was that on Thursday, new weekly jobless claims finally cracked the 400,000 barrier by falling 9,000 to 397,000. Historically, when new claims fall below the 400,000 figure, companies start ratcheting up their hiring plans for the upcoming months. On top of the normal temporary hiring pattern during the holiday months, we should continue to see good job reports.
Most of the other economic news also was positive. Last Tuesday, the Institute for Supply Management announced that its new orders index rose to 52.4 in September, up from 51.2 in August. Another positive sign was on Wednesday, when we learned that vehicle sales rose 7.5% in October. The other economic report I liked last week was that the Labor Department reported that productivity rose by 3.1% in the third quarter and economic output rose 3.8%, which represents the biggest rise in 15 months.
Typically, rising productivity is great news for improving corporate earnings. That’s one reason why third-quarter earnings have done so surprisingly well. With over 77% (388) of the S&P 500 companies reporting so far, earnings are up 22.9% over last year, while revenues are up 12.7% year-over-year.
