What the March Jobs Report Tells Us About the U.S. Economy
Bad news first: Unemployment is still steady at 6.7% despite recent positive job reports. This means there are still nearly 10.5 million Americans out of work.
But this is not because the economy is stalling. Rather, the U.S. economy is continuing to show progress and moderate expansion in the face of the recent harsh weather. Considering the economy has added an average of 170,000 jobs per month since the beginning of the year, all signs look pretty good. Unemployment is only being maintained because an increasing number of Americans who had withdrawn from the labor market due to lack of opportunity are looking once more.
True, there are still 3.7 million Americans who have been out of work for more than six months. But these people now account for 36% of total unemployment -- proportionately far lower than the levels of two years ago. Coming on the heels of Federal Reserve Chairwoman Janet Yellen's comments last week on the state of the U.S. job market, the news should be rather effective in assuaging market fears.
More good news
According to the Bureau of Labor Statistics, March saw marked increases across a number of industries. Business services expanded by 57,000 positions. On the minus side, 29,000 of these are listed in the temporary help industry; on the other hand, computer systems designs and similar information technology added over 6,000 jobs.
Despite a light fall in nursing positions, health care gained ground with 19,000 new jobs, with an additional increase of 20,000 in ambulatory health care and outpatient servicing.
Resource jobs also exploded, adding 7,000 jobs (or twice the monthly average over the last calendar year) in logging and mining.
Finally, additional analysis has revised January and February job creation data. In both cases new job creation figures have been increased, in the case of the former by over 15,000 and over 22,000 for the latter.
Economists are split as to how to view this recent spate of good economic behavior in the U.S. Considering the relative stability of public sector jobs, the initial reaction would seem to be that the economy is even better than data supports, since the job increases would mean an expansion of private enterprises. Coupled with the creation of nearly 200,000 positions, it looks like a fairly upbeat economic report.
Yet, there remain a significant number of detractors who believe that the "new normal" jobs-added range is going to be between 150,000 and 200,000. This means, they say, that market analysts need to stop making such a big deal of the recent surge in economic activity. Adding that analysts are asking the wrong questions when considering job market health, though, even detractors are still tentatively positive about the economy.
So far, the opening months of 2014 have been positive in the face of inclement weather and a draw-down in government investments. If data trends stay the same, then expansion will likely occur (or continue) in a number of industries. Most of these are blue collar (like mining activities support or machine manufacturing), but this is far from a defined market trend.
The technology industry should continue to expand due to recent developments (such as Microsoft's new Cortana assistant system), as should chemical manufacturing and distribution. Companies with even a moderate focus in this area (such as DuPont or Lyondell Basell) will most likely continue on current market trends, though not boom overly much.
One area that is being overlooked by the recent jobs report is the development of green energy in the U.S. market system. Dow Chemical's recent work in developing a new photovoltaic encapsulation film, for example, should increase investment into green energy efforts further. While this may not turn into massive immediate gains financially, the event itself is noteworthy as future jobs reports might reflect this success.
While economists may be confused about how to analyze the market, there is one thing that cannot be denied: the private sector has managed to reach (and may surpass) its 2008 peak, and that is a very good thing.
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