After the stronger than expected January employment report, economists and investors enter the new month anticipating another solid, though not quite as good February reading on jobs. The dual headwinds of bad weather and the West Coast port labor dispute likely kept job creation to 230,000, below the average monthly gain of 336,000 over the preceding three months. The retreat does not auger bad times, rather a return to more sustainable levels. While job creation is important, there will likely be more attention focused on hourly wages. After stagnating throughout the recovery, average hourly wages jumped by 0.5 percent in January, the best month over month increase since November 2008. With prices remaining low, wages do not need to rise too much to amount to a decent bump in a worker’s take-home. In the past 12 months ending January, real (after inflation) hourly wages were up 2.4 percent and that was before Wal-Mart and Target announced that each would increase their minimum pay to employees.
With regard to those much-ballyhooed increases, they are good news, but let’s take them for what they are: small increases in a sector that has the lowest hourly rate of pay. According to the most recent government data, the average hourly retail worker in a non-supervisory role earns $14.65, but that includes people who work at auto dealers and other outlets that pay more than traditional retailers. The average hourly pay is $9.93 for cashiers and low-level retail sales staff, according to Hay Group's survey of 140 retailers with annual sales of $500 million. The same goes for the food service industry, where wages increased at an annualized pace of 3 percent in the last half of 2014. Nonsupervisory food-service employees earned $11.11 an hour last year, compared to the national mean of $20.61.
What economists and employees are looking for in the upcoming jobs reports this year is a more broad-based wage increase that lifts American workers out of the recession/recovery doldrums. With the economy percolating at a decent pace, there is finally hope that those elusive gains should not be too far behind.
Beyond the jobs report, investors will be on NASDAQ 5000 watch. It has been 15 years since the NASDAQ composite first crossed the magical mark and last week, it came within 12 points, before slipping back. It will be historic to reclaim the level, but (here comes the buzz-kill alert) if you adjust for inflation (about 2.2 percent over the last 15 years), NASDAQ 5000 is actually NASDAQ 7000 (6,941 to be exact).
Of course the poster child for the dot-com boom and bust was Pets.com and its hysterical sock puppet. (Hat tip to CBS Producer Kim, who found this great montage!) The company was founded in 1998 and just one year later, the Pets.com mascot got its own balloon in the Macy's Thanksgiving Day and then appeared in a Super Bowl spot in January 2000. Pets.com raised $82.5 million in an initial public offering in February, rose to a high of $14 and nine months later the company melted down and everyone’s favorite sock puppet went to doggy heaven.
MARKETS: It was a strong month for stocks, with the S&P 500 tallying its best monthly percentage gain since Oct 2011.
- DJIA: 18,132, down 0.04% on week, up 5.6% on month, up 1.7% YTD
- S&P 500: 2104, down 0.3% on week, up 5.5% on month, up 2.2% YTD
- NASDAQ: 4963 up 0.2% on week, up 7.1% on month, up 4.8% YTD
- Russell 2000: 1233, up 0.1% on week, up 5.8% on month, up 2.4% YTD
- 10-Year Treasury yield: 2.00% (from 2.14% a week ago)
- April Crude Oil: $49.76, down 2.1% on week, up 3.2% on month
- April Gold: $1,213.10, up 0.7% on week, down 5% on month
- AAA Nat'l avg for gallon of regular Gas: $2.40 (from $2.28 week ago, $3.45 a year ago)
THE WEEK AHEAD:
8:30 Personal Income and Spending
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
Motor Vehicle Sales
Abercrombie & Fitch
8:15 ADP Private Sector Jobs Report
10:00 ISM Non-Manufacturing Index
2:00 Fed Beige Book
ECB outlines bond buying program
10:00 Factory Orders
8:30 February Employment Report
3:00 Consumer Credit