Payroll Numbers Spook Wall Street

Posted Jun 4th 2010 10:40AM by Connie Madon
Filed under: Economic Data, Headline News

Considering that payrolls rose by 431,000 in May, including 411,000 census workers, and that the unemployment rate fell to 9.7%, you might assume that this large increase would spark a rally in stocks. Wrong!

Economists had projected a gain of 536,000, the median forecast by Bloomberg News. So in a flash, traders decided that the numbers missed the mark and stock futures sold off immediately with the Dow futures down more than 100 points.

Private payrolls rose only 41,000, much less than expected. The gain in private payrolls followed a gain of 218,000 in April, revised down from 231,000.

Manufacturing payrolls increased 29,000, again less than the expected 33,000.

Employment at service providers rose 427,000. Construction companies reduced payrolls by 35,000, after rising in April.

Government payrolls rose 390,000. State and local governments fell 22,000.

The U-6 unemployment rate, which includes part-time workers who prefer full-time work, decreased to 16.6% from 17.1%.

So the lesson here is don't trade on expectations. If yesterday, you saw that payrolls were to increase by 536,000 and placed a buy trade based on that information, you are now sitting with a nice loss. Always wait until the numbers come and the market trades against them. Never jump the gun.

Tags: featured, inthenews, jobs, payroll numbers, unemployment rate