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Morning Commentary

Musing About Jobs

By Charles Payne, CEO & Principal Analyst
8/31/2017 10:35 AM
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Tomorrow we get the most important economic release in any given month: the Bureau of Labor Statistics (BLS) Employment Report. Coming into the week, consensus was 185,000 net job creation in August. That number is now much higher after the report from the ADP Jobs Report came in at 237,000 private sector jobs.  The news sparked the debate over who should get credit. In fact, businesses must bet on-the-come with respect to employees and inventories.

The election of Donald Trump clearly got a lot of businesses to instantly increase their hiring (see arrow) and lifted the bar for monthly hiring in the process.

The relationship between the ADP and the BLS reports has been one of hit-or-miss. Often, the ADP report is a good harbinger for government calculations. Only two months have shown glaring differences this year; the BLS number has been higher in the last two months.

In May, the ADP calculated 255,000 new jobs while the government only counted 50,000. April’s ADP saw only 148,000 new jobs versus the government’s tally of 207,000.

At some point, I hope we can implement low taxes, fewer regulations, and regain that American spirit. America is where everyone dares to dream; we could and should be hitting 500,000 jobs a month, which is right for the size of the current population. For now, 200,000+ jobs a month would be huge against the backdrop and challenges we are overcoming.

ADP Highlights:

Service +204,000

Goods -Producing Jobs +33,000

I continue to say goods-producing jobs are the best parameters for the health of the economy, and the underpinning foundation to build upon. These are good-paying jobs that put dads back to work, especially in the heartland. In addition, these high wages mend families and stem the opioid addiction plague.

We’ll know in 24 hours what the government data says. However, the BLS number is clear that the jobs situation is moving quickly in the right direction.

The Market

It was a solid session for stocks on Wednesday as tech resumed its winning ways along with materials (my favorite sector) before Hurricane Harvey got a boost from future rebuilding in Houston and the rest of the state of Texas.

Sector Performance

% Change

S&P 500 Index



Consumer Discretionary (XLY)



Consumer Staples (XLP)



Energy (XLE)



Financials (XLF)



Health Care (XLV)



Industrials (XLI)



Materials (XLB)



Real Estate (XLRE)



Technology (XLK)



Utilities (XLU)



Today’s Session

On the eve of the jobs report, we continue to get signs of improving wages. In July, income climbed 0.4% driven by private industry wage increase of 0.6%.  Anecdotally, wages should have been on the rise for the past year but continue to confound the experts with sluggish and spotty incremental increases. Experts are blaming the skills gap, but that should help pay for competent workers.

Income came in less than expected but with interesting and positive trends. I will explain on the Afternoon Note.

It’s going to be a strong start for stocks ahead of the jobs report, and now, it’s looking like the worst month of 2017 could actually finish in positive territory.



I have missed you at Fox Business and wondering if you'd ever allowed to resume your show. In the meantime I would like to stay in touch for any small stock investment ideas through your network. Thanks.

mobashir ahmed on 8/31/2017 11:02:40 AM

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