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US Labor Conditions Improve, Global Uncertainty Shakes Consumers

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US Labor Conditions Improve, Global Uncertainty Shakes Consumers PART 1 OF 3

US Unemployment at 5.1%, More Jobs in Financials and Healthcare

Financials and healthcare recorded job gains in August

According to the latest “Employment Situation Summary” report, the healthcare and social assistance, and financial activities sectors increased their job gains in August. Financial sector firms E*TRADE Financial (ETFC) and Charles Schwab (SCHW), and healthcare firm Regeneron Pharmaceuticals (REGN), gained on September 8’s close. ETFC was up 7.49%, SCHW rose 6.87%, and REGN rose 8.55%. These stocks have yielded 12.41%, 3.01%, and 32.30% so far in 2015, respectively.

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The BLS Employment Situation Summary Report for August gave mixed signals

According to the report, “Total non-farm payroll employment increased by 173,000 in August, and the unemployment rate edged down to 5.1 percent.” The payroll numbers were down from July’s 245,000. However, the declining US unemployment rate—as you can see in the chart above—is a good sign for the US economy. So the report had mixed signals for US investors and the Federal Reserve. This jobs report, published monthly by the Bureau of Labor Statistics (or BLS), has a big influence on the Fed’s monetary policy decision.

However, some people believe the unemployment rate doesn’t capture the number of people leaving the workforce altogether, the underemployed, or people working for subdued wages.

For those who agree with Janet Yellen

For people who agree with Fed Chair Janet Yellen that the unemployment rate alone doesn’t present a composite view of US labor market conditions, the LMCI is an important indicator. Investors in both bonds (BND)(AGG) and stocks (SPY)(IVV) in the United States track the indicator for important clues as to economic progress.

We’ll look at the LMCI reading for August in the next article of this series.

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