It's jobs, stupid!
by Peter Switzer
Tomorrow the USA gets the critical unemployment number when the latest monthly jobs report is released. This revelation could have a big bearing on whether share prices head north or south next week.
In their regular commitment to scaring people, the doomsday merchants in our midst — who have been wrong on the Great Depression Mk II, the stock market rebound since 6 March, the resurgence of China, the ability of Australia to avoid a technical recession and that the US recession would end this year — still cling to the warning that a US jobless recovery is on the way.
That’s why this jobs report will be looked at with a fine-tooth comb. However, the unemployment rate, which is now 10.2 per cent could be given a few more months before it’s expected to actually fall.
Last week, the number of US workers filing new applications for jobless insurance beat expectations, falling to the lowest level in more than 14 months.
Working against new jobs in the USA has been the slow comeback of the US consumer and retail numbers overnight point to US shoppers still being reluctant to spend as they used to before the GFC.
A recent Reuters story summed it up neatly: “Aggressive cost cutting by businesses has pushed productivity sharply higher over the past months. That, combined with a surge in profits during the quarter, has convinced analysts that companies may start hiring and help the economy's recovery.”
Break into three per cent
In the September quarter the US economy broke out of the recession readings to grow by annual pace of 2.8 per cent. If this can punch into the three per cent plus region, then talk of double dip recessions and a jobless recovery will be KO’d.
That could be right but if we get better or worse than expected jobs news tomorrow, there could be some serious action before Christmas. Let’s hope we see a nice Santa Claus rally but even if we don’t, continuance of better than expected economic news should be great for share prices in 2010.
I am all the way with the USA. Go the US economy!
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Published on: Friday, December 04, 2009blog comments powered by Disqus