EmailThe S&P 500 slipped 0.3% yesterday, yet that didn't stop it from registering its best January showing (+5.0%) since 1997. Naturally, we heard a lot yesterday about the January Barometer, which is a maxim that says, "As the S&P 500 goes in January, so goes the year."
That is a warm thought on a very cold, Chicago morning, but of course it can't be taken for granted even though there have been only seven major errors in the January Barometer since 1950, according to the Stock Trader's Almanac.
So far, though, things are staying on course in February.
The S&P futures are up 10 points and are trading 0.7% above fair value, bolstered by better-than-expected (but still contractionary) PMI readings out of the eurozone, a worse-than-expected (but still expansionary) PMI reading out of China, better-than-expected earnings results from ExxonMobil (XOM), and an Employment Situation report for January that fit the bill of prior reports, meaning it was better than feared but not as good as had been hoped for.
Nonfarm payrolls increased 157,000 in January (Briefing.com consensus 180,000) while private payrolls jumped by 166,000 (Briefing.com consensus 193,000). The offset is that benchmark provisions led to some notable upward revisions to nonfarm payrolls in November (from 161,000 to 247,000) and December (from 155,000 to 196,000).
Altogether the benchmark revisions added 335,000 more nonfarm payroll jobs than previously reported for 2012. The average monthly gain in 2012 was 181,000. It can be said then that 2013 is off to a little slower start in terms of hiring, yet that is splitting hairs in a civilian labor force that is pushing 156 million people.
The focal point of the report, as far as the equity market and popular press are concerned, is apt to be the unemployment rate, which ticked up to 7.9% from 7.8% while the labor participation rate held steady at 63.6%.
The unemployment rate remains well above the Fed's guideline of 6.5% when it comes to considering tightening policy. The takeaway in this report is that the market need not fear the thought that the Fed is going to be withdrawing its accommodation anytime soon.
Average hourly earnings increased 0.2%, which was expected, and the average workweek held steady at 34.4 hours (Briefing.com consensus 34.5). The manufacturing workweek edged down to 33.6 hours from 33.7 hours.
Clearly, the labor market can be a lot better than it is. The good news is that it is not as bad as it used to be.
Long-term unemployed workers (27 weeks or more) accounted for 38.1% of the unemployed versus 39.1% in December and 43.0% in the year-ago period. The U6 unemployment rate, which accounts for discouraged workers not included in the household survey, held steady at 14.4%; however, that rate stood at 15.1% a year ago.
The futures market has extended its early gains. The S&P futures were up six points ahead of the report and are now up ten points.
The January employment report was perfect insomuch as leaving monetary policy expectations in place, but it is still a long way from perfect insomuch as it relates to conditions in the real economy that the liquidity-driven market continues to overlook.
