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Investing Specialists

The Jobs Report Was Good but Not Great

As good as the raw data was, there are some disturbing portions of the report, writes Morningstar's Bob Johnson.

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After some violent upswings and downdrafts, the S&P 500 was virtually unchanged for the week. Fears of spreading Middle Eastern violence and rising oil prices drove the market down sharply on Tuesday and Friday. Meanwhile, the market spiked sharply on Thursday due to accelerating economic activity.

The lowest initial unemployment claims report of this recovery, a spike in same-store sales reports, and further improvement in the ISM's nonmanufacturing report all were on display Thursday, generating a lot of buying activity in the stock market. This came on top of strong auto sales and a robust ISM manufacturing report on Tuesday and a strong consumer income report on Monday.

Continued construction weakness (no surprise there, especially given the weather), an uptick in the Challenger Gray and Christmas layoff report, and a lackluster consumer spending report (though this is for January; February reports are much improved and discussed below) were the lowlights of this week's economic activities. Most analysts considered Friday's job report a positive, but I found some of the details a little disappointing.

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