Unemployment Rate Sinks to 7.7%, American (AMR) Revenue Up

Stocks were trading relatively flat on Friday following a Labor Department announcement that the US added 236,000 jobs in February, dropping the unemployment rate 0.2%, to 7.7%. This new unemployment rate is the lowest for the U.S. in nearly four years and the addition of new jobs has maintained a monthly average of 200,000 since November. January’s job numbers were downwardly revised to 119,000 from the original estimate of 157,000. The new job growth was partially attributed to construction hiring and the sector saw its highest level in six years with the addition of 48,000 jobs. The construction sector has added a total of 151,000 new jobs since September. The manufacturing sector added a total of 14,000 jobs in February. While there was an addition of 24,000 in the retail sector and the addition of 24,000 obs in education and health services. Paul Ashworth, an economist at Capital Economics, said “This may not yet be the substantial improvement in the labor market outlook that the Fed is looking for, but it’s moving in the right direction.”

The Commerce Department announced that wholesale inventories expanded at their fastest pace since December 2011. There was a jump of 1.2% to a total of $504.4 billion after an upwardly revised 0.1% in December. This blew past economists expectations of a 0.3% increase. The jump was largely attributed to construction and computer companies building up their stock. There was also an increase in durable goods of 1.1%. Sales of durable goods were up 0.7% in December. One particular example of a company who has been boosting production, capital spending and increasing inventory is Steinway Musical Instruments (LVB) Their Chief Executive officer Mike T. Sweeney, said “We’ve been in an under-inventoried position and the fact that inventory dropped is not necessarily where we want to be. We expect 2013 to be a good year overall and have ramped up production accordingly.”

McDonald’s (MCD) announced that their February sales were down less than originally expected on Friday. Sales at stores open at least 13 months were down 3.3% which was less than the 3.5% drop analysts were expecting. Same-store restaurant sales in Europe were down 1.5%, also less than the expected 1.63% drop analysts were predicting. Comparable sales for the company in the United States were flat while falling 0.5% in Europe. President and Chief Executive Don Thompson said, “We have the operating experience to manage through the current challenging environment and the right strategies in place to grow the business for the long term.”

American Airlines (AMR) announced that passenger revenue was up in February even though there was a drop in passenger traffic. Passenger revenue, which is revenue for every seat flown one mile, jumped 4.7% over February of last year. There was a drop of 1.1% in customers boarding their flights. Customers flew a total of 9.78 billion miles in February compared to 9.89 billion miles flown in February of 2012. The company did cut their passenger-carrying capacity 4.4%.

That’s all for the day

We’ll see you back here tomorrow, loyal readers.

All the best,

Jack Aubrey, Oakshire Financial