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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (40195)	9/5/2003 7:53:11 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69358

15:32 ET Employment Preview: The economic numbers have been coming in consistently stronger than expected. Home sales, retail sales, industrial production, the ISM survey, you name it, it's been strong. Tomorrow, the biggest release of all is due, and expectations are for the first increase in payroll figures in seven months. Most economists expect a small increase of maybe 10,000 to 25,000 in non-farm payrolls. Payrolls have fallen a combined 486,000 in the past six months. The data indicate that layoffs have declined in recent months. The number of new claims for unemployment has dropped in recent weeks, and the announced layoffs as measured by the Challenger, Gray & Christmas survey was at a very low level in August. That doesn't mean, of course, that a lot of companies were hiring. Yet, many people often forget how big the US economy is. The number of jobs, as measured by payrolls survey, is 130 million. Most of those jobs are at smaller firms, as is most of the job growth. If McDonald's announces planned elimination of 2,000 positions over the next year, it makes headlines, but it is hardly a ripple in the total job numbers. There can be a lot of hiring under the radar screen at small firms, and a very small percentage looks big. [Harry: The problem with this conclusion is that most of these jobs are lower paying than some of the jobs lost at the larger companies. The real measure is the lost in net buying power by the people losing their job at the larger fimr versus getting a job in a smaller company] Consider: it takes job creation of about 100,000 a month just to keep up with population growth. To reduce unemployment significantly, payrolls will have to increase over 200,000 per month. That sounds like a huge number given the trends the past two years, but it has happened regularly in the past. A gain of even 50,000 payrolls reflects a very small gain across this large economy. Closely watched as well will be the manufacturing component of payrolls. It is too early to expect manufacturing employment to bounce back significantly. Manufacturing trends lag the overall economic trends, and manufacturing employment lags even more. If anything close to unchanged is reported, it would be a strong signal for the economy. Also remember, as we pointed out in a recent Stock Brief, manufacturing employment has been flat over the past 40 years. It is a good indicator of short term swings in the economic cycle, but it is wrong to conclude that a sustained uptrend in manufacturing employment is required before this can be called a "real" recovery. The employment data is the most significant economic release. Yet, in recent months, the market has often had a knee-jerk reaction to the data, then gone the other way. There are so many traders that set up for the data that it is hard to read what will happen even after the release. It is not any easy release to trade. Also, it is highly unlikely that this release will change economic assumptions. The economy is clearly in a classic business cycle upturn. Employment may lag this cycle more than most, due to cautious business spending, but it will eventually turn up. The auto sales, home sales, and chain store sales are all very strong. Industrial production is up. Regardless of the numbers tomorrow, economists will still be forecast 4% to 5% real GDP growth for the third quarter. This particular employment release is not as critical as some employment releases, and will not alter underlying assumptions.