After a Non-Farm Payroll number that was close enough to analyst’s estimates so as to not be news (120K vs. 125k expected) the U.S. Bureau of Labor Statistics released a headline drop in unemployment to 8.6% down from 9.0% the month before. The lowest percentage reported in 30 months.
That’s the good news. The bad news is the reason why critics hate the U-3 unemployment statistic used by the U.S. Government as the official rate, the Labor Force Participation Rate dropped from 64.2% to 64.0% meaning and most of the ‘gain’ in unemployment came from workers moving from ‘unemployed’ to ‘discouraged’ and therefore no longer being counted, namely 350,000 of them. An upward revision in employment statistics from September and October accounts for the rest.
Stocks rallied on the headline news but gave back all of the gains on the day as the report was digested to close flat for the day but up nearly 7% for the week. Moreover, GOP leadership remains bellicose to the idea of the IMF funding any bailout of Europe. The S&P 500 closed at 1244.28, off 0.1%. Oil rose to $100.99/bbl on Israeli/Iranian tensions and reports of strikes at sites in Iran.
Gold closed the week at $1748.50/oz, up $65 or 3.9% while the yield on the 10 year U.S. Treasury Note fell back to 2.04% ending a two-day rally spurred on by the coordinated Central Bank action to open up their overnight swap lines to provide short-term relief in the sovereign debt markets.
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