Enjoying the Employment Surprise
July 8, 2017
We kicked off the second half of 2017 with a holiday to celebrate America’s greatness and a jobs report whose headline number knocked the cover off the ball. Prior months have been revised higher as well.
In June, 222,000 new jobs were added versus the consensus estimate of 174,000. That’s huge. Sure, the nation can do a lot better, but the Street was bracing for a much lower result after yesterday’s disappointing ADP report, in which 153,000 new jobs came in below estimates of 180,000 and down from 253,000 in May.
Highlights for me from yesterday morning’s report include the 361,000 people back in the labor force and the fact that it was another strong month for those dirty fingernail jobs:
Goods Producing Jobs:
- Mining: +8,000 (+56,000 since October 2016)
- Manufacturing: +16,000
- Construction: +8,000
There are many aspects of investing that I find infuriating, including selling on good or even great news. Part of this phenomenon is assuming that the positive momentum won’t last. I get that in the sense that I become melancholy in August because I know summer will be over soon, but that doesn’t really apply to investing.
Remember, great companies often stay great for a long time and really great companies have a history of coming back from adversity.
As I watched the futures this morning, I sensed an urgency to sell this better-than-expected jobs report. But boy, what a change from Thursday we saw. All three of the major indices closed Friday in the green.
Still, that doesn’t mean we won’t see a bit of pressure resurface next week. Don’t lose faith if we do, as any selling would not be built on facts and trends, but rather knee-jerk reactions based on hunches and machines. We’re also seeing this phenomenon play out with crude oil, which should be above $47 a barrel now but is breaking back under $45.
If you are in this for the long haul, don’t let reactionary forces of the crowd shift your position(s). A few bumps and bruises along the way up are natural, and they’ll be well worth it down the road when you’re sitting on hefty profits.