Job Openings Data Confirms Slow Growth, June 2012 Weak Unemployment Trend Holding Firm:
No real housing recovery can occur without jobs and income growth.
Employers are not hiring. The impact of the current problems in U.S. political economy and general business uncertainty are causing employers to hold off on obtaining new workers. Job openings fell to a five month low according to the Job Openings and Labor Turnover Survey. The survey showed an 8 percent decline from the previous month with 3.4 million job openings with 160,000 less jobs filled in the month of April.
Jobs data which is closely watched by the Federal Reserve has been dismal for the past 3 months and June 2012 looks to be another slow month based on initial jobless claims data that has trended downward. We believe the new jobs data that will be released after the FOMC meeting tomorrow will also confirm the June unemployment data from the government will be within the range of the last 3 months if not – lower. Data related to housing and car sales are less important than overall jobs growth which gives the Fed more ammunition to extend “Operation Twist” or ease further. Jobless claims data on Thursday would need to rise by over 100,000 to signal a change in the monthly trend.
No Housing Recovery Without Jobs
Housing data today didn’t change the mind of many investors today who glossed over the data in anticipation that excess inventory issues are being alleviated because jobs data can’t sustain a housing recovery. Much of the housing recovery is occurring due to cash purchases and lack of credit is still a problem for many potential buyers. Income growth also remains weak which could stop the gains in the housing market.
We like technology, financials and small caps in an environment where easing may occur overseas and by the U.S. Fed Reserve. No easing may occur at the June meeting but time constraints would by a significant problem if the Fed waits until August or September 2012.