FRIDAY APRIL 2, 2010

Good Employment Report

After you take into consideration all of the distorting factors such as the weather and the hiring of Census workers, 123,000 private sector jobs were created in March.  In short, this was better than expected and perhaps a sign of that a jobs recovery is underway.  At a minimum, it shows that the economy is moving in the right direction.

The bond market took the report in stride, with Treasury yields barely changing on the news.  The market seems to be taking a wait and see approach.  While the report is better than expected, the sustainability of the employment is still in question.  The long-term unemployment numbers continue to grow which is worrisome.

What does this all mean?  The implication of these numbers is that the economic recovery may be stronger than the pessimistic forecasts.  The numbers suggest that the first quarter GDP may exceed 4% while the economic consensus is calling for around 2%.  If this stronger growth is realized, corporate earnings should continue to demonstrate healthy growth and that would be good for stocks.  If the employment growth demonstrates sustainability and the GDP numbers are realized, it won't be long before the talk begins to focus on when the Fed begins to raise interest rates.  And that won't be good for bonds.

POSTED AT 1899-12-30 08:38:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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