Last Week’s Economic Data Wasn’t That Bad Despite Big Job Losses


Last week featured a pair of bad job reports, but there were other positives.

ADP’s private-sector payrolls report on Wednesday and the Labor Department’s non-farms payrolls report on Friday both missed estimates. They were also negative — showing actual job losses — for the first time in at least six months.

That’s the bad news. The good news is that restaurants, bars, hotels and schools accounted for all the losses. Those industries suffered as rising coronavirus cases triggered more shutdowns. Economists see the potential for significant rebounds in the same areas as vaccines continue to roll out.

Other numbers were outright positive:

  • Initial jobless claims were lower than feared for the third straight week.
  • The Institute for Supply Management’s manufacturing index had its best reading in almost 2-1/2 years as orders spiked.
  • ISM’s service sector report beat estimates.
  • Crude-oil inventories were lower than expected for the second straight week. If prices keep gaining it could encourage more drilling and investment.
  • Automobile sales ended the year strong, according to reports from General Motors (GM), Cox Automotive and JD Power.

The improved economic sentiment pushed 10-year Treasury yields above 1 percent for the first time since March. Right on cue, minutes from the last Federal Reserve meeting indicated central bankers could start intervening to keep longer-term interest rates lower.

There’s also a high probability of a large stimulus package from Congress and higher payments to Americans.

In conclusion, coronavirus caused an unprecedented recession. But there is huge pent-up demand, low interest rates, stimulus coming and signs the economy wants to return to normal.

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