Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

This morning's better-than-expected jobs report adds to the growing list of recent economic readings that is showing positive, albeit below-trend, economic growth in the U.S. economy. This should help in reassuring the markets and further offset some of the recessionary fears.

The Bureau of Labor Statistics reported the creation of 103K jobs in September, significantly better than the roughly 60K expected. Private sector jobs totaled 137K, significantly above the expected 90K level, and an acceleration from the August tally.

We also have positive revisions to the prior two months, with August going up by 57K and July increasing by 42K, for a total of 99K net additions to the originally reported July and August numbers. The unemployment rate remained unchanged at 9.1%. Average work week ticked up, while average hourly earnings increased 0.2% after slipping in August.

If we step back from the swings in the BLS numbers over the last two months and look back at how the labor market has performed since the beginning of the year, we see a clear loss of momentum. Today's positive numbers only partly erase that negative trend. This loss of momentum in the labor market is in-line with how the broader economy has behaved in this timeframe as well.

The economy started the year on a fairly positive note, but then came across a number of hurdles, ranging from the spike in oil prices as a result of developments in the Middle East to the Tsunami in Japan. The acrimonious debt debate in the summer and the subsequent rating downgrade further damaged confidence in the recovery.

The question at this stage is whether the recovery can get back on track after receiving all these blows, particularly given the unsettled European backdrop and signs of weakness in China and other emerging markets. The economic readings lately, including today's jobs numbers, have been showing evidence that the recovery was on track, albeit at a below-trend pace.

In corporate news, we have a positive pre-announcement from software maker ServiceSource International ([url=http://www.zacks.com/stock/quote/srev]SREV[/url]) and negative pre-announcement from Illumina ([url=http://www.zacks.com/stock/quote/ilmn]ILMN[/url]), the maker of scientific measurement instruments.

It's all about jobs today. The payroll report is further evidence that there is enough latent momentum in the economy to avoid a fresh recessionary downturn. If we get a similar reassurance on the earnings front in the coming days, then we will most likely be starting a fresh rally in the market.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%