Stocks Down, Rates Even Despite Blowout ADP Jobs Growth

Despite better jobs data discussed below, mortgage and Treasury bonds are up slightly (keeping rates even) and stocks are down on concerns about Europe’s debt crisis and weaker U.S. earnings.

The main market moving event of the week is tomorrow’s BLS jobs report. More below.

ADP Jobs Report
-ADP private Jobs for December +325,000

-Well above consensus (178,000) and previous (204,000)

-While ADP and BLS sometimes seem loosely correlated this is an indication and tomorrow’s BLS non-farm jobs will be strong

Challenger Job-Cut Report
-Announced Layoffs for December 41,875

-Previous was 42,474

-Except for a spike in September this number has been rather flat for about two years.

Initial Jobless Claims
-372,000 for week ended December 31

-Down 15,000 from previous week’s revised 387,000 (was 381k)

-4-week moving average was 373,250, down 3,250

-Weekly resumes down trend after rising week of 12/24 (the only rise in last 5 weeks)

-Below 400k signals improving jobs picture

-Average claims since 2000 are 390k, so 1-week and 4-week numbers are better than long-term trend.

The jobs market is a more complex thing than simple totals reveal. From month-to-month most people have the same job they had the month before but some workers die, some retire, some get laid off and some get rehired. In addition the market ideally should absorb young people who are seeking to enter the jobs market.

If people defer retirement because they do not have enough savings then total jobs may be higher than otherwise and while that is good because they are still earning and spending, this could be contributing to fewer people at the other end of the age spectrum getting hired. That $7 trillion in lost value in household wealth which yesterday’s Federal Reserve report mentioned may have shifted the demographics of the jobs market.

ISM Non-manufacturing Sector
-This is a survey index of services sectors

-Index value for December was 52.6. Previous was 52.0. Consensus was 53.4.

-50 is dividing line between expansion and contraction

-This shows modest growth.