The market must have known something yesterday that I did not. It expended a lot of positive energy yesterday on some good economic data and today it is somewhat lethargic, given the extraordinary economic data that arrived this morning. The ADP employment report points to a strong surge in hiring for June. The market should like this more than the positive manufacturing data from yesterday. Maybe, the big buyers knew what was coming today.
Nevertheless, getting past the numbers, I think the market is sensing something else is flowing underneath the headline numbers – it has a sense that something has changed structurally.
- Many employers that once held off on hiring now can’t wait any longer because “they have stretched everyone for the most part to the maximum.
Could it be “We have reached a tipping point,” as the Solar City’s CRO said when referring to his company hiring workers at a rate of 400 per month? True, his tipping point is demand for solar panels on rooftops, but the fact remains that Solar City is experiencing demand that requires hiring an additional 400 workers per month.
- Temporary help and employment services both saw jobs jump more than 8 percent in May from a year earlier.
Yes, 281,000 new hires in June is good, and that is reflective of the numbers I just posted above, but there is still more to the story underneath the big employment numbers.
- Hotel occupancies across the U.S. averaged 62 percent during the first five months of this year, up from 60 percent during the same period last year and the highest average for that time frame since 1996.
Folks are traveling across the US this summer, the traditional travel season in America. Even with gas prices up, folks are traveling here and there and staying everywhere. This not only speaks to consumers spending money, which is good, but it adds another layer to the unfolding story about where the market is headed, which is the story of where the US economy has been and where it is headed.
- Since the recession, the travel industry has added 749,000 jobs to employ close to 8 million in May, a record high.
The economic story is unfolding everywhere, but, in one area, an area I have said is fundamentally changing our world, the story is quite powerful.
- The boom in technology has driven the unemployment rate below 1 percent in the industry.
Tech companies across the board are having trouble filling jobs because the rate of job growth is rising faster than the supply of workers available. Yup, the character and structure of the US economic story is changing and it is changing fast now. Maybe, this is what sent the market on a buying spree yesterday, the sense that the US has reached an economic tipping point. Maybe yesterday’s move signals the market understands the transformation that began in 2006 has turned the corner and the US is now headed for a period of economic growth similar to or greater than what the US experienced post WWII.
- Housing starts on an annual basis surpassed 1 million in May and April. They had declined to as low as 478,000 in April 2009, creating pent-up need for homes and apartments.
Over one million housing starts per annum speaks to more jobs in construction, for sure, but the rippling effect on hiring across the economy from building homes speaks to more jobs everywhere.
The fact is an economy creating demand for housing points to an economy on the rise, just as a travel industry with record employment points to an economy on the rise and the employment boom in technology adds depth to the transformational, unfolding economic story, a story that the market understands and likes.
- Employment may be headed for a “breakout year” as companies feel more secure adding to payrolls following several years of demand rising only to stumble on threats from U.S. budget standoffs, a debt-ceiling induced default and a European credit crisis.
Maybe the market is prescient. Then again, me thinks the big buyers have access to information, as we all do, but some of the big boys and girls have it just a little bit before the rest of us, and in the summer season, this can mean big market swings.
Clearly, yesterday’s big move was predicated upon something other than the global manufacturing data, as today’s lethargy suggests a market just a little bit ahead of itself. No matter, the years-long economic transformation is in full swing and what the market is now seeing is the fruit of those years.
Trade in the day; invest in your life …
