Friday saw the release of the April employment report from the Bureau of Labor Statistics (BLS). Results were that we saw an increase of 290,000 jobs in April. This was the strongest rate of hiring in 4 years. So why didn’t the stock market rise on the good news?

 

I’ll leave aside the concerns over European debt, Thursday’s trade error, and that fact that 60,000 of those 290,000 new jobs were really just temporary census workers.

I’ve been saying for a year now that the initial unemployment claims number that everyone tracks is going to remain stuck at very high levels -say 10%- throughout 2010.  We saw an inkling of that with Friday’s data as the initial unemployment claims level rose to 9.9% from 9.7% despite the fact that 290,000 people found work. What’s happening and what will continue to happen is the millions of people that are either in the extended term unemployment bucket, or those that have otherwise given up looking for work-will come back into the initial claims data and cause it to rise.

 

Also for some broad perspective, please keep in mind that the US economy needs to continue to generate new jobs at the rate we saw last month – every single month — for a decade in order to get back to the employment level we enjoyed in 2007. How likely is that? But that is the sort of strong economy that is priced-in to stock prices – at least at prices from a week ago.

 

Another piece of employment data you won’t see in the mainstream financial press is that the average duration of unemployment hit a new all time record of 33 weeks. Given that sooner or later the Congress will have to vote to stop extending unemployment benefits support, this is very bad data for the economy.