KPIG Radio December 4

Stocks opened strongly following a much better than expected payroll report but slipped late. The November employment report turned in its best performance in nearly 2-years with a loss of just 11,000 jobs a figure far better than the expectation for a loss of 130,000 additional jobs, the unemployment rate fell to 10%. Even the net birth/death statistical model contribution was a fairly modest +30,000 for November. From a month ago average hourly earnings gained .1% while the average work week increased .6%. Previous months job losses were revised sharply lower by 159,000, temporary help increased by 52,000 positions a 4th consecutive increase. While one positive surprise does not make a trend this report does suggest that employment may be turning the corner and that positive figures are near at hand. That said this marks the 23rd consecutive month of job losses, the longest streak since the depression. Total job losses are 4.8 million this year and 7.2 over the last 23 months. A record 5.8 million people have been unemployed 26-weeks or longer, this is a record 3.8% of the workforce, both going back to 1948. Overall a very good report and one of the most positive data points I’ve come across in quite some time. Like yesterday’s services index that slipped back into contraction, the ECRI weekly leading index continues to suggest the economic recovery is faltering, while the top line number increased to 129.5 the smoothed annualized growth rate fell to 23.4 a 5th consecutive decline. The US future inflation gauge increased to 95.7 in November, far below the high of 125.1 seen in October 2005 suggesting that inflation remains essentially in neutral. For the week the Dow is on track to close up some 30 points or about 1/3% while the NASDAQ looks to add 40 points or roughly 2%.