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There is an old English proverb that states, "Cold hands, warm heart." It alludes to the fact that an outward appearance may not be consistent with an inner reality.

That's certainly applicable to Friday's job's report, which sent the S&P 500 SPY futures into a tailspin at its release.

To be fair, I think the Employment Situation Report is an overrated economic survey. Its timing is coincident at best and lagging at its worst. It is subject to substantial revision--as seen in Friday's "benchmark update"--and therefore can mislead at turning points.

In trying to make the best use of all data that is available to us as investors, however, it is best to peel back the report's layers. No, this month's isn't an onion to make you cry. Contrary to the headline's of "big miss", "dismal" and "disappointing", this report had more good news than bad.

Sure, the headline figure was below-consensus. The U.S. only added an average 116,000 jobs over the last two months. It was adding jobs at nearly twice that pace for the prior twelve months. I suspect that it is the last two months' dismal weather, and not a newly faltering economy, that is to blame. The report's internals make that clear.

The figures that matter were all strong. Production and nonsupervisory hours worked were flat month over-month, yet hourly earnings grew. Thus, weekly earnings grew month-over-month and year-over-year in both nominal and inflation-adjusted terms. The economy has more workers making higher wages and that's a good thing.

Temporary help service positions, which are believed to lead general employment, rose at the fastest pace in 18 months. Part-time slack dropped at the fastest rate since 2004. And while the number of nonfarm jobs added last month was less than hoped, the year-over-year rate of jobs growth ticked up to 1.74%. Plus, prior months were revised much higher.

Add them up: more workers making higher wages, less slack, and better year-over-year readings all reveal firm internals despite a weaker-than-consensus headline figure.

There is plenty to be pleased with in this report and we'll get a better read once the weather warms up in the months ahead. I suspect the data will thaw out too.

Source: Chilly Jobs Report: Its Internals Will Warm You Up