Non-Farm Payrolls Up 266,000 In November, Unemployment At 50-Year Low

Since markets stalled out on Thursday in anticipation of the November non-farm payroll report from the Bureau of Labor Statistics (BLS), it's prudent to focus on what that report says about the US economy and prospects going forward.

Released at 8:30 am ET, the report concluded that there was an increase of 266,000 jobs created in November. That was well beyond all expectations, which centered around 185,000. The gain was the largest since January of this year, but is somewhat misleading since it includes 46,000 workers at GM plants in Michigan and Kentucky returning from a 40-day strike.

So, a more reliable, realistic number would be around 220,000, which is still much better than expected, and puts to rest the notion that the US job market had stalled out.

Wall Street is expectedly ebullient over the big surprise number which shows that the US economy is still moving forward and that the labor market remains tight. Unemployment dropped to a 50-year low of 3.5%

Another encouraging sign was wage growth, which shot up 3.1%. This is a strong signal that the economy is in good shape and that the labor market is tight. Employees are asking for - and receiving - pay increases and better benefits from employers.

A main takeaway from the retail sector in the pre-holiday period was that a mere 2,000 jobs were added, but the catch is in the distribution of that small gain. Within the industry, employment rose in general merchandise stores (+22,000) and in motor vehicle and parts dealers (+8,000), while clothing and clothing accessories stores were decimated, losing 18,000 jobs.

Attributable to the "Amazon effect" and to great strides over the years to online merchandising, as well as the overabundance of clothing outlets and their reliance on such a narrow segment, it is not surprising that purveyors of shirts, slacks, dresses, and accessories were hardest hit. Heightened competition in the space and slim profit margins due to heavy discounting also contributed to the demise of a good number of chains.

Among major chains that largely will be turning out the lights - or have already done so - in 2019 were Payless Shoes, Gymboree, Fred's, Charlotte Russe, Shopco.

Forever 21, Dressbarn, and Gap stores also announced a high number of store closings over the past year. The trend will continue, with as many as an additional 75,000 stores potentially lost by 2026, according to investment bank UBS.

The trend is clear. Shop online or at general merchandise retailers. The glory days of single sector retailing are long past.

At the Close, Thursday, December 5, 2019:
Dow Jones Industrial Average: 27,677.79, +28.01 (+0.10%)
NASDAQ: 8,570.70, +4.03 (+0.05%)
S&P 500: 3,117.43, +4.67 (+0.15%)
NYSE Composite: 13,482.30, +24.33 (+0.18%)

Dow's Recent Gains Are Adding Up

With the midterm election turmoil nearly out of the way, stocks have begun the month of November in grand, year-ending fashion, the Dow Jones Industrial Average posting gains in three of the last four sessions, and, extending back into the final days of October, five of the last six were winners.

This string of positives has managed to erase much of the pain that accompanied October, which registered as the worst month of 2018 for stocks. In the past seven sessions, the Dow has advanced nearly 1200 points, an impressive performance, and should continue the path forward since there are few impediments ahead.

The Fed's FOMC meeting this Wednesday and Thursday should prove a non-event, as the committee is almost certain to stand pat on interest rates until the December meeting, when a 25 basis point hike in the federal funds rate is a virtual lock.

The overall outlook is strong for stocks presently, though headwinds could still emerge, October's declines still fresh in the mind, but, sentiment seems to have shifted from selling into rallies to buying on dips once again, and the Dow has regained roughly half of the losses incurred since marking an all-time high on October 3rd.

Other indices have followed suit, though the NASDAQ continues to lag, with many of the tech leaders now laggards, representing, to some, buying opportunities. To others, these tech firms have become no-go zones, appealing only to the most speculative of investing types.

Markets prefer stability, and November appears to offer plenty in the way of complacency and compliant data readings. With holidays straight ahead, it would not be a surprise to stocks exceed their previous highs.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25

At the Close, Tuesday, October 6, 2018:
Dow Jones Industrial Average: 25,635.01, +173.31 (+0.68%)
NASDAQ: 7,375.96, +47.11 (+0.64%)
S&P 500: 2,755.45, +17.14 (+0.63%)
NYSE Composite: 12,480.06, +55.75 (+0.45%)