Job Openings Suggest the US Economy is Not in Trouble $VTI $DIA $SPY $QQQQ $TLT

June 9th, 2010 § 0

The bears came out with passion and excitement on Friday with the release of the infamous employment report……….apparently the 41,000 private jobs added was just not good enough. So to the bears that confirmed that the US economy is definitely heading back into a recession/double dip/tripple dip (take your pick). But does the number of jobs added to the economy in any one month tell you much about the health of the economy, enough to justify a drop in the Russell 2000 of some 8% in three days?

We think that the employment report (as per last Friday’s variety) is about as useful as a Zimbabwean Dollar to put it politely (the stuff that Kimberly Clark produces is actually far more useful). Why? Because the number of jobs added (or lost) in anyone month is a lagging indicator at very best.

We place more emphasis on the number of job openings than jobs added. Why, well in very simplistic terms…..there has to be a job opening before a job is added to the economy. On Tuesday the job openings report was released (the JOLTS report). We suggest you read it and take careful note. In essence there were 2,785 openings in March and 3,078 for April, an increase of just over 10% – now that is significant!

JOB Openings Total

OK in case you are wondering……..most of the job openings are accounted for by the private sector. Now what if employers did not hire but cracked the whip and got employees to work longer hours…….few people paid attention to the fact that the average hours worked by employees increased, and the trend has clearly been up since October last year!

I would take the increase in job openings and average hours worked far more seriously than the number of jobs added in any one month.

I never like to sit on the fence as you are probably well aware……….I see little credible evidence suggesting that the US Economy is in trouble/slowing down/faltering……or heading for a proverbial “double-dip”. We see the latest weakness in the US stock market as a correction of the primary bull trend (it is a buying opportunity rather than reason to sell). It is exciting being a bull in a sea of bears!