Bill Losey’s Weekly Economic Update for March 7, 2011

JOBS REPORT (NEARLY) LIVES UP TO EXPECTATIONS
Wall Street had high hopes for the February unemployment report. Would it show that more than 200,000 new jobs had been created? Well, it came close – the data revealed 192,000 net new jobs, the best increase in nearly a year. The jobless rate ticked down to 8.9% last month, and the number of underemployed Americans (those either without work or working part-time) dropped to 15.9% from 16.1% in January. On the downside, the Labor Department data showed that just 64.2% of the working-age population was either employed or seeking employment last month. You have to go back to 1985 to find a labor force participation rate that low.

WAGES UP 1.0% IN JANUARY
The payroll tax holiday promoted a dramatic increase in personal incomes last month. Additionally, the Commerce Department said that the personal savings rate improved by 0.4% in January to 5.8%. Yet personal spending increased by only 0.2% in January and actually slipped 0.1% in inflation-adjusted terms.

SERVICE & MANUFACTURING SECTORS KEEP GROWING
According to new Institute for Supply Management surveys, the expansion of both sectors continued in February: the service sector reading improved by 0.3% to 59.7 and the manufacturing sector reading went up 0.6% to 61.4.

OIL, GOLD & SILVER PRICES LEAP NORTH AGAIN
Gold cracked a new ceiling last Wednesday, hitting an intraday high of $1,440.10 per ounce. Friday, U.S. gold futures settled at $1,428.60 an ounce. Gold prices have climbed 6.53% over the last five weeks. Silver hit yet another 31-year high on Friday, with futures hitting $35.32 per ounce. Oil prices rose 6.68% last week alone, settling Friday at $104.42 a barrel; oil futures are up 14.27% YTD on the NYMEX.

A WINNING WEEK (BELIEVE IT OR NOT)
After five rather volatile trading days, the DJIA, S&P 500 and NASDAQ had all managed weekly advances. Their performances for the week: DJIA, +0.33% to 12,169.88; NASDAQ, +0.13% to 2,784.67; S&P 500, +0.10% to 1,321.15.