Why the bad job figures may be good and why this bull run is about to gather steamLate last week, a bad development on the job market front bore fruit for stocks, in particular, the Dow Jones industrial average, the S&P 500 index and Nasdaq composite, which all touched record marks.
The reason why is because the market discerned the information as motivation for the Federal Reserve to stand their ground after the projected rate hike slated for the following week.
However, a much closer look revealed that the market misinterpreted the jobs report. It was reported that the sluggish progress of employment growth and subpar salary advancement is not at all beneficial for consumer incomes as well as the economy.
On a deeper dive, the report was not a bad news. There, you will see the actual total hours worked, the broadest measure of labor input which rose 1.7% from a year ago .
In other words, utilization of labor has accelerated and the market for available labor has clearly tightened, as evidenced by the jobless rate dropping to a 16-year low of 4.3%.
That combination is a recipe for more pay and higher wages, an evidence that can be found on Friday's jobs report.
Aggregate pay rose 4.3% from a year ago, the fastest pace this year. Moreover, the measure of a worker's pay, the employment and income taxes withheld from workers paychecks also showed an acceleration, rising a 5.4% from a year ago over the past two months.
So this is all good news,
more money coming in means more money is able to go out and spent to consume
These Treasury data aren't subject to revision, however there is a good reason to suspect that the jobs report under counted the wage and employment growth.
I wouldn’t be surprised to see outsize wage gains in next month's report.
Incoming evidence from corporate earnings calls and business surveys, including the Fed's Beige Book out last week, have pointed to rising wage pressures and a tightening labor market.
Companies like Jack in the Box, AutoZone and Union Pacific are among companies reporting accelerating wage pressures in recent months, while American Airlines and JPMorgan implemented broad pay hikes. On Tuesday, Dave & Buster's Restaurant chain said it's sees a 5% wage inflation, up from the 4% to 4.5% that it anticipated for the second half of 2016 back in September.
If you know where to look, you’d know that there are so many great opportunities out there. There are a lot of opportunities that can be seized, so long as you know of the places to search in.