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February 3, 2012 – 6:09 pm

The jobs report for January was a big surprise with 243,000 new jobs, dropping the unemployment rate to 8.3%. Also, the previous two months were revised upward.

These numbers are good and should be looked at in that context but it is wrong not to look deeper to get a complete picture on what is going on. One good trend is in manufacturing which continues to be the strongest growth component of job growth. Manufacturing in the U.S. is gaining strength on the back of increasing exports. I think this trend will continue. The world is becoming a flatter playing field where cheap wages in other countries are starting to look less like a big advantage. Transportation costs and U.S. productivity tilt in our favor. Also, in Asia demand for higher wages is starting to gain traction.

In one sense the jobs report is misleading. Well over one million workers dropped off the employment rolls. What happened to them? They are still unemployed. Many just stopped looking for jobs. Also, many are older workers and they may never reenter the job market as their skills wane.

We all know that the government has never properly counted the number of unemployed and underemployed but no matter how you read it January was a good month for returning workers.

Good Trading
Steve Peasley

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