Jobs? What Jobs?

The January jobs report was pretty lousy. Down 17,000 jobs. The unemployment rate dropped to 4.9%.

Anyone who reads this blog knows I've been saying that we were not heading for recession so I will not sugarcoat this. This is a bad report. Factory payrolls were down 28000, construction was down 27000. Services added 34000 and retail added 11200. Government lost 18000.

I guess we should be encouraged that January is a notoriously weird payroll month. The Census Bureau updates population numbers and we get benchmark revisions to old employment data. For instance, December was revised up by 68000. Overall the revisions resulted in lower employment numbers for the last year.

I also wonder about the difference between this report and the ADP report yesterday. The ADP report tracks the revised numbers from the government pretty well so it may be that this number gets revised higher at some point in the future. But I don't think we can count on that.

From a market perspective, this may not matter all that much. It is not a secret that the economy is slowing and a bad number was fairly well factored in. However without the Microsoft/Yahoo news this morning, I suspect we'd be down pretty hard at the open.

At this point it is getting hard to stay in the slowdown instead of recession camp. If we keep getting lousy numbers like this, it may turn out that I've been wrong about the economy. It won't be the first time and probably not the last. One saving grace is that I don't have to be right about the economy for our investment strategy to work. We've performed much better than the stock market recently due to our exposure to commodities, bonds and even REITs. Diversification works.