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Michael Michaud
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Michael Michaud is the founder of Invest2Success.com (http://www.invest2success.com/) and the Invest2Success Blog (http://invest2success.blogspot.com/). He has been investing and trading in the financial markets since 1989. He founded Invest2Success.com to empower individual institutional... More
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  • US Unemployment Report Analysis 0 comments
    May 3, 2014 7:53 PM | about stocks: SPY
    Unemployment Rate Down

    May 02, 2014 - The Weather Improved, People Went Back to Work, and the Market Is Going Higher by Market Authority

    The weather improved and people went back to work in April. That's the story behind the surprising news that 288k jobs were added last month, blowing away expectations of 218k. Furthermore, the Unemployment Rate fell to 6.3%, the lowest level in 5 years.

    It's been a long time coming, but we've completed the round trip to pre-recessionary employment. Check out how this recovery compares to other recessions since WWII:

    Percent Losses Job Losses Post WWII Recessions

    One factor influencing the Unemployment Rate is the drop in Labor Force Participation. When there are less people looking for work, be they retired or their benefits expired, they aren't counted among the ranks of the unemployed.

    US Labor Force Participation Rate

    The big drop last month may have resulted from the January cuts in Unemployment Insurance, as more people lose benefits and drop out of the labor force.

    Perhaps the most important part of the report, Average Hourly Earnings, was unchanged from the prior month. Weekly hours worked was also unchanged at 34.5.

    Since these numbers are unchanged, the 288k jobs print would indicate the terrible weather in January, February, and March caused businesses and potential employees to hold off looking for work until the weather improved. If labor demand was significantly accelerating, workers would see higher earnings and longer weekly hours.

    The market's response has been tepid. However, we are flirting with 52-week highs, and the blowout headline number is enough to push the SPY into a higher trading range.

    SP500
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