Morning Report: Decent jobs report 4/1/16

Stocks are lower after the jobs report. Bonds and MBS are flat.

  • Payrolls up 215k vs 205k expected
  • Unemployment rate 5% up .1%
  • Labor Force Participation rate 63%
  • Average hourly earnings up 2.3% YOY
  • Average hourly earnings flat at 34.4

Manufacturing employment fell 29k, while restaurant increased 25k, retail, up 48k and construction up 37k. This is the fifth straight increase in the labor force participation rate, which bottomed out (hopefully) in September. The lower the labor force participation rate, the lower the speed limit for the economy. The improvement in the participation rate drove an increase in the unemployment rate, and this is one of those times where an increase in the unemployment rate is actually a good thing because it means that discouraged workers are now beginning to see enough opportunity out there to look for a job. Remember, if you are unemployed and not actively looking for a job, you are not considered to be part of the labor force, and therefore you aren’t officially “unemployed” according to the government. Wages rebounded from a negative February. Overall, a decent report – the wage growth will certainly push the Fed to take another step towards normalization of interest rates, and a June hike is looking more certain.

Despite the drop in manufacturing employment, the ISM Manufacturing Index increased smartly in March, New Orders and production drove the increase, while employment fell. Prices rose as commodity and raw material prices increased. This level of manufacturing would be consistent with 2% GDP growth. A shortage of skilled labor continues to be a problem.

Construction spending fell 0.5% in February, while January was revised upward to an increase of 2.1%. Residential construction rose 0.9% and is up 10.5% YOY. We are almost back to the pre-bubble highs.

Consumer Sentiment ticked up in March, according to the University of Michigan to 91.

14 Responses

  1. A little bit on why people hate Cruz:

    This summer, Cruz published the book A Time for Truth, in which he claims that Senate Majority Leader Mitch McConnell and Senator Rand Paul repeatedly misled and betrayed him. (Unsurprisingly, McConnell, Paul, and many of their colleagues have very different recollections of the incidents cited in the book.) A Time for Truth also includes descriptions of Republican meetings that participants likely assumed would not be made public. “No one is going to want to talk up something on a personal issue or a contentious issue if they think they are going to read about it the next day in the paper or it’s going to be released in the press,” said Senator Dan Coats of Cruz’s writing. “It really undermines any sense of team or any sense of cooperation.”

    Also “rudeness” but the examples I’ve found seem to consist of “doing something Mitch McConnell and John McCain don’t like”. I was looking for something more definitive. His collegiate experiences seem to consistent of bad body odor (eh, dudes) and hanging around female students and creeping them out (eh, dudes).

    A lot of the impression that everybody hates Ted Cruz seems to come from quotes of people hating on Ted Cruz because they hate Ted Cruz. My favorite is Dubya: “I just don’t like the guy.” Dubya was so straight up. Despite the Iraq debacle and his general Big Government Conservatism, I miss Dubya.

    Ann Coulter on Cruz: “Cruz is a sleazy, Rovian liar.” Coulter also doesn’t like Karl Rove, one assumes.

    Craig Mazin, a college roommate, said this of Ted Cruz: “Mr Mazin said: “What you see before you now is exactly who he was back then. He does not change, the way zombies and mould don’t change.
    “I want to be clear Ted Cruz is a nightmare of a human being. I have plenty of problems with his politics but, truthfully, his personality is so awful that 99 per cent of why I hate him is just his personality. If he agreed with me on every issue I would hate him only one percent less.””

    Really got to wonder what the details are. Or if it is all just a reaction to some super-creepy vibe everybody seems to get.

    Young Ted Cruz:

    He’s gonna have a long row to hoe, I’ll say that much.


    • My favorite “everybody hates Cruz” anecdote is that when he was a senior at Princeton the other debate club members recruited someone to run for club president just so Cruz couldn’t be it. These are the sort of psychologically crushing “Rosebud” events which shape a person’s entire set of life goals.


      • Guy must have something. It’s tough for someone who is both so off-putting and so reviled by the establishment (and has so often offended his admittedly thin-skinned colleagues in the senate) to put together a campaign machine and do as well as he has. Folks like Reagan and Dubya were, in many ways, more propelled by their personalities (Dubya may have been in some ways hampered, but a lot of what the left used to lampoon him was endearing to others; I never had a problem with any of his malapropisms . . . most of them I kind of liked). That is, their personalities were a key part of why they performed, and a key reason why others, like Jeb!, have floundered. But given what I’ve seen, I’m amazed Cruz beat our more likable guys like Rubio. Gotta be the platforms, and maybe Rubio’s previous support of amnesty.


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