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Jobs Data: Mixed Signals For Store Front Businesses, Decent Gains For Stocks?

Store Front Business gains may be muted going forward. Stocks may be the best game in town, for now.

Those are two conclusions we draw from the latest nonfarm payroll data, which, fresh out from the Labor Department Friday (May 6) show the most lackluster growth since September, at a seasonally adjusted 160,000, and off from an average run rate of 200,000 additions monthly.

The unemployment rate has held steady at 5 percent. The 160,000 tally is far below the 205,000 gains that had been expected by economists.  Revised numbers also show that February and March added fewer jobs than had been estimated.  Despite the slower pace of hiring, and now the average gains for the year have come in at 192,000 per month.

For those businesses that are the shops that line the main streets and side streets of the towns in the U.S. – and those seeking employment through those businesses, the slowdown in hiring is not a reversal of gains but does hint at some caution.

However, wages have picked up a bit, which means that there is a bit more certainty in keeping the people who are already on board happy, in anticipation of some better growth and demand that lies ahead.  The average hourly earnings received by workers in the private sector was up by 0.3 percent to $25.53, and up 2.5 percent in the month as measured year over year.  The pace of that increase is also markedly better than the 2 percent seen over the past roughly six years.  The hours worked in the week was also up.

Broken down by sector, the biggest gains were seen in the professional and services industries, which means that full time positions were the ones filled, by and large. One rather broad measure, that of Americans who bill themselves as too discouraged to look for work, stands at 9.7 percent, the lowest since the depths of the financial crisis.

With the latest data, the Fed becomes incrementally less likely to boost rates because the signal is that there is a little bit of a brake effect on growth, and one that does not need to be complemented by higher cost of debt.

The implications for stocks are slightly positive, as the absence of an all but certain near-term boost to rates means that for returns, stocks remain the more immediately rewarding place to park investment dollars.

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