By Carlos Guillen

So far today, stocks are trading significantly lower, with the Dow Jones Industrial Average down over 150 points, or a bit over one percent. Clearly, today's jobs data created disappointment and, in many ways, generated doubt about the degree of its validity. One thing appear to be more certain now, and that is that a recovery of the world's biggest economy will be prolonged, keeping many in distress for quite some time.

The April jobs data certainly served to dampen the spirits of investors that were hoping to see a continuation of the jobs gained early in the year. Well … not going to happen. According to the latest data from the Department of Labor, the unemployment rate declined in April to 8.1 percent from the 8.2 percent achieved in March, landing lower than the Street's consensus of 8.2 percent and representing the lowest level since February 2009. However, while this drop in the unemployment rate would normally be considered to be encouraging, the manner in which it was achieved was certainly discouraging as many people simply dropped out of the work force. Also discouraging was that non-farm payroll employment increased by much less than expected.

So far, the trend in the unemployment rate is still favorable, but the April result had one major caveat that is worth noting. While the number of people unemployed was reduced by 173,000, the reason for the drop was simply because most of the unemployed chose to give up looking for work and moved out of the labor force, allowing for a rather fictitious improvement in the unemployment rate. Also intriguing was that the level of employment dropped by 169,000; this means that a total of 342,000 people simply moved out of the work force.

Perhaps the most surprising aspect of the report was that the change in nonfarm payroll jobs was much worse than expected as it showed an increase of 115,000 jobs while the Street's consensus called for a gain of 162,000. This nonfarm payroll figure also came in a bit below ADP's nonfarm jobs number posted last Wednesday that showed an increase of 119,000 jobs. It is worth noting, however, that while there have be some fluctuations, the economy has been able to consistently add jobs in each of the last 19 months. Moreover, the warmer than seasonal weather may have also contributed the less than expected result as many individuals appear to have found employment ahead of time, giving the prior couple of months' data a boost but starving out the momentum in April. In fact, nonfarm employment in February and March were revised higher by a total of 53,000 jobs.

The net effect of the jobs data has certainly been negative today as reflected by the sharp downturn in equity markets. Ironically, a worse nonfarm figure (below 100,000) would have actually pushed markets higher today as it would have significantly increased the probability of the Fed putting a quantitative easy program into effect, but obviously this was not the case. So, let the slow painful recovery continue.

Jobs Indicative of a Global Slowdown?
By David Urani

I'm not sure which adjective to use to describe this jobs report, because there are a lot of different things running through my mind. A few words that come to mind are "disappointing," "startling," and "suspicious". Obviously the disappointment is in the decelerating, anemic growth of our job market. What startles me is the idea that our latest bout of recovery in the last several months low looks as though it may have ground to a halt. Yet, what makes me suspicious is that so much of the economic data this month has been mixed and even seemed baloney in a way because of some seasonal adjustments and other discrepancies; the jobs report is not infallible either.

Out of all the info that I looked at one trend really struck me, and that was temps versus full-time workers. Ever since the recession hit, as you can see below, the trend has been a switch to part-time from full-time as employers have gotten cold feet. The recovery in full-time has was coming back but in April, the two reversed sharply once again. Part-time jobs actually rose by 508,000 month to month, while full-time jobs fell by a hefty 812,000. That was the biggest one-month drop in full-time jobs since March 2009. It is a scary reversal, and may reflect employers' fear of the worsening recession over in Europe. Yet, the magnitude of the changes in just one month is almost too big to believe. I don't know if I really believe the numbers, but if we actually lost 812,000 full-time jobs last month it's a big red flag.

And don't forget about Europe, which rolled out some more rough economic data. Their services PMI indexes came in soft, as could be expected, and overall you can see that services activity is in trouble on a global level. Not only do most European nations continue to show a plunge deeper into recession, but recall that yesterday's USA services PMI reading was also a decline. On top of that, Europe's composite (both manufacturing and services) PMI reading was revised lower to 46.7 from 47.4. The European recession is a real crisis, and I think that these readings, along with the poor manufacturing results from Europe earlier this week, give some legitimacy to the weak employment data this morning in that it looks like we're facing a global slowdown.

Technically speaking, ahead of the jobs report the markets seemed to be torn on whether or not to break through to the new multi-year highs. It's looking like this is what might solidify the trend below the peak for now, until we can get a big breakout bullish announcement (QE anyone?).

Note: we are holding off on an afternoon Hotline idea.