Jobs Data Paints a Mixed Picture - InvestingChannel

Jobs Data Paints a Mixed Picture

Proprietary Data Insights

Financial Pros Top Meme Searches December


Beware Meme Stocks

2021 was the year of crazy meme stocks. 

Don’t expect that to carry over into 2022, at least on the long side.

As we note in our main story, the unemployment picture looks fantastic.

That gives the Fed all the room it needs to raise rates soon.

In fact, based on Wednesday’s meeting minutes release, markets ramped up expectations of a rate hike in March to 80% where they hadn’t expected one until June.

Higher rates should suck up liquidity and force unprofitable meme stocks to sell off.

We’re not talking about real companies like Tesla (TSLA), but companies like AMC (AMC) and Gamestop (GME) being priced normally.

Our favorite companies are the ones with a combination of value and growth. Stocks like Apple (AAPL), Microsoft (MSFT), and the like.


Jobs Data Paints a Mixed Picture

Key Data

  • Nonfarm payrolls rose 199,000 in December vs 422,000 estimates.
  • The unemployment rate dropped to 3.9% vs 4.1% estimate.
  • Wages increased 4.7% vs estimates of 4.2%

We got the jobs data equivalent of a compliment sandwich.

Unemployment Rate Drops

At 3.9%, unemployment rates are now back to pre pandemic levels and historical lows.

Thankfully, the labor force participation rate held at 61.9%. Plus, broader measures of unemployment that include marginally attached and discouraged workers declined last month as well an average of 0.2%.

What you may not know is the main numbers reported are done based on the ‘establishment’ survey. This surveys private nonfarm businesses.

The household survey, which is conducted by the Census Bureau as part of the Current Population Survey, showed a gain of 651,000.

All this together still leaves us around 2.9 million jobs shy of where we were in February of 2020.

Job Gains Tepid

Lower than expected job additions highlight hiring problems faced by employers. Based on the last JOLT job openings report, there are still 10.6 million positions open at the end of December.

Leisure and hospitality, one of the key drivers for job recovery, added 53,000 jobs, much slower than earlier in 2021.

Government jobs also continue to decline slowly, shedding 12,000 jobs last month.

Wages Help

With wages climbing 4.7% YOY, they still fall short of inflation. However, the large amount of job openings lends itself to employees retaining negotiating power into 2022.

The Bottom Line: Employment numbers suggest a strong economy and jobs available for workers.

This gives the Fed the fuel necessary to raise interest rates sooner rather than later.

That’s bound to put pressure on high-growth social media names such as Pinterest (PINS), Snapchat (SNAP), and the like.

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