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Productivity

September 2, 2009 – 12:17 pm

In the depths of a recession, and as the economy works its way out of that hole, productivity always begins to shine. We have seen that in recent reports. The numbers are released monthly and this morning productivity was up over 6% while salaries continue to fall. When this happens corporate profitability rises sharply.  Any incremental sales increase will mean strong profit growth. So expect corporate earnings to increase sharply in the coming quarters.

Also out this morning was a report that fewer job cuts have been announcement this last month and that has been a trend for several months. Of course Friday we have the job’s report for last month which will tell how many jobs were lost in August. But the announcement of jobs lost is a leading economic indicator whereas the actual job loss report is a lagging indicator.

Still with productivity doing so well and signs of a recovery the economy is crawling its way out of this recession. The issue is how fast and is the stock market to far ahead of the recovery? With every announcement of new data the market reacts but the goal is to judge the longer term effects of the statistics and invest accordingly.

Good Trading
Steve Peasley

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