Unemployment Report

Wow, what a crazy day in the market. The Unemployment rate increased from 9.5% in the prior month to 9.6% in August.  The number was in-line with forecast, therefore the market rallied approx +127 points on the Dow.  If we look into the BLS report, we see that the labor force expanded this month by 550k and the number of unemployed expanded as well (we haven't seen a number this high since May's report).  The expanding labor force dilutes the unemployment number or the number of unemployed persons.  We also see an increase of 4% from the previous month in the number of part time workers due to economic reasons.  The unemployment rate of 9.6% is a break in the last 3 months trend of moving sideways at 9.5% and will need to be monitored (but does not seem like a good indication in the least).  The market almost seem disjointed from reality these days.

Perhaps it was the Non-Farm payrolls report which was forecasted to be -101k and came in at -54K (same number as previous month).  Yes this is better news (no increase that is), but I will need to see the revision that gets done on the number later or if numbers were pushed into next month for this one to stand out.  Another interesting note was the nonfarm payroll revisions that came in for Jun and July which brought the numbers down making the overall numbers look better.  Private sector added 67k jobs, which is down from the previous months adds and reflects after the revision.  Indeed it seems with a bad unemployment rate and a sideways Non-Farm number someone thought this was worth a rally in the market, but fundamentals remain weak.  I'll stick with the fundamentals, until they start moving in a more positive (improving) direction.