CAMS Weekly View from the Corner – Week ending 3/10/2018
March 12, 2018
Our vigilant watch for continued signs of on-going economic strength was bolstered this past Friday with a tremendous Employment Report for the month of February. Expectations leading into this important monthly report were for 200,000 new jobs while the actual result reflected a 50% surprise with 313,000 new jobs having been created in the month.
In addition to the headline surprise it is important to note the prior two monthly reports were revised higher than what was originally reported. Furthermore, attaining the 300K+ level has become a rarity since year 2000 whereby we have only seen these levels 17 times out of the 218 month time period.
Placing this report into additional context we now see the average of the previous three months registering 242,000 new jobs. This represents the highest level for the three month rolling average calculation in the previous twelve months.
When we realize population growth alone is approximately 175,000 people it is imperative to see a mid-200,000 level – or higher – to satisfy new employment entrants as well as to bring back the long-term unemployed. The picture below represents the amount of new jobs created per month, via the Establishment Survey, which is one of two parts of the overall Employment Report.
Click for Larger View: https://fred.stlouisfed.org/graph/?g=iWVP
The Employment Report consists of two different surveys with one being the aforementioned Establishment Survey while the other is known as the Household Survey. The Household Survey gives us additional information which for this month paints the picture of strength even clearer.
Via the Household Survey we see the Labor Force actually grew by 806,000 people. For clarity, the increase in Labor Force is comprised of people who found employment as well as people who have chose to begin looking for employment but have not yet found a job. The Employed figure, within said Survey, also grew notably and increased by 785,000 people.
The Household Survey is telling us, via the interaction of the Labor Force and the Employed categories, is we seen a tremendous amount of new people that chose to begin looking for employment and hence, officially entered the Labor Force and an astounding 97% of those people found employment. This speaks to the underlying strength of the employment market and is quite impressive.
Our mantra of an absolute need for solid economic growth to support our historically highly valued markets received a noteworthy piece of information and continues to point to a solid economic backdrop.
I wish you well…
Ken Reinhart
Director, Market Research & Portfolio Analysis
Portfolio Manager, CAMS Spectrum Portfolio
Footnote:
H&UP’s is a quick summation of a rating system for SPX9 (abbreviation encompassing 9 Sectors of the S&P 500 with 107 sub-groups within those 9 sectors) that quickly references the percentage that is deemed healthy and higher (H&UP). This comes from the proprietary “V-NN” ranking system that is composed of 4 ratings which are “V-H-N-or NN”. A “V” or an “H” is a positive or constructive rank for said sector or sub-group within the sectors.
This commentary is presented only to provide perspectives on investment strategies and opportunities. The material contains opinions of the author, which are subject to markets change without notice. Statements concerning financial market trends are based on current market conditions which fluctuate. References to specific securities and issuers are for descriptive purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. There is no guarantee that any investment strategy will work under all market conditions. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. PERFORMANCE IS NOT GUARANTEED AND LOSSES CAN OCCUR WITH ANY INVESTMENT STRATEGY.
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