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Investing Specialists

Don't Be Faked-Out by Jobs and Sales Data

Though they disappointed, results aren't quite as bad as they look.

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Just when everyone had decided the economy was ready to boom again, employment data disappointed and retail sales were at least modestly slowed by a major snowstorm the day after Christmas. I'm not sure the results are quite as bad as they look, but they're enough for me to temper my short-term giddiness ever-so slightly. Jobs managed to grow by just 103,000--barely above the 94,000 average of the past year--instead of accelerating as I had expected. October and November were revised upwards, but not quite as much as I forecasted.

Data from the International Council of Shopping Centers showed December growth of 3.1% versus my hope of 3.5% to 4%. Neither data point was catastrophic, so there's no need to panic. Both data points were likely affected by seasonal patterns that were more exaggerated than usual.

Offsetting the negative news was a stronger-than-expected manufacturing sector, auto sales that were wildly better than the consensus estimates, and a report on the service sector that suggested acceleration. I was particularly glad to see the ISM nonmanufacturing index jump to 57.1% from 55.0% for December, as the service sector has held back economic growth thus far in the recovery.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.