Robust Jobs Growth

Elena
07 Apr, 2006
New York City

U.S. stock futures predicted higher start of Friday session after upbeat jobs report helped ease inflation worries. The Labor Department said that nonfarm payrolls rose by 211,000, vs. expectations of a rise to 190,000 nonfarm payroll jobs last month. Wage growth came in below expectations, as average hourly earnings rose 0.2% compared with the 0.3% rise expected by economists.

[R]9:15AM Stock futures indicated robust start on jobs data.[/R]
Stock futures indicated a strong market opening on easing inflation concerns, following a government report which showed payrolls increased in March while wage growth moderated. One of the most closely watched economic reports showed that U.S. employers added 211,000 nonfarm jobs in March and the unemployment rate unexpectedly slipped back to a 4-1/2-year low 4.7%. Wage growth came in below expectations, as average hourly earnings rose 0.2% compared with the 0.3% rise expected by economists. S&P 500 futures were up 4 points, above fair value. Dow Jones industrial average futures rose 33 points, and Nasdaq 100 futures rose 7.25 points.

Crude oil prices retreated on profit-taking after recent gains and news that Nigeria will restore normal oil output. Light sweet crude May delivery dropped 69 cents to $67.25 a barrel. London Brent dropped 58 cents to $67.26. European gold hit a 25-year high on speculations metals will deliver better profits than stocks and bonds. In London gold for immediate delivery rose $2.96 to trade at $598.27 per troy ounce. Silver for immediate delivery gained 8 cents to trade at $12.22. The U.S. dollar advanced versus major currencies ahead of jobs report. The euro traded at $1.2190, down from $1.2227. The dollar bought 117.67, up from 117.64. The British pound was quoted at $1.7499, down from $1.7524.

[R]Robust employment growth. Unexpected drop in employment rate.[/R]
The Department of Labor released its highly anticipated March employment report before the start of trading on Friday, showing better than expected employment growth and an unexpected drop in the unemployment rate. The report said that non-farm payroll employment increased by 211,000 in March following a downwardly revised increase of 225,000 in February. Economists had expected an increase of about 190,000 jobs compared to the increase of 243,000 originally reported for February. The Labor Department said that the job growth was concentrated in the services sector, with notable growth in the professional and business services, leisure and hospitality, retail trade, and health care industries. Manufacturing employment fell by 5,000 jobs over the month. Additionally, the report showed that the unemployment rate fell to 4.7 percent in March from 4.8 percent in February, surprising economists who had expected the unemployment rate to remain unchanged. With the decrease, the unemployment rate matches a 4-1/2 year low. Prior to the release of the report, there was some concern that stronger than expected job growth could raise concerns that a tight labor market would lead to higher wages and higher inflation. However, the report offset some of these concerns, as it showed that average hourly earnings increased by only 0.2 percent in March following a 0.4 percent increase in February. Economists had expected hourly wage growth of 0.3 percent.

Lazare Kaplan International Inc., ((LKI)), jewelry retailer, reported Q3 earnings of 6 cents a share, down from a profit of 12 cents a share year-ago despite sales growth in Q3 to $157.9 million from $120 million in the year-ago period.

AZZ incorporated, ((AZZ)), a manufacturer of electrical products reported unaudited financial results for Q4. Net income advanced 78% to 45 cents per share, up from a net income of 26 cents per share in the year-ago period on 33% revenue growth. Backlog at the end of Q4 was $73.8 million, compared to $64.8 million for the same period a year ago. Incoming orders for Q4 came to $40.9 million while shipments for the quarter came to $50.3 million, leading to a book to ship ratio of 81 % for Q4.


[R]8:45 AM Volatile Sensex Index in India close lower.[/R]
Sensex Index in Mumbai, India lost 157 points or 1.3% to close at 11,589. The index is expected to cool after rising more than 8% in less than ten trading days. Sensex remained volatile for the day as market was influenced by unsubstantiated rumors. Market lost close to 1.7% by mid-morning on rumor that several institutions which including international investors have been barred from purchasing shares. Market regained most of the losses by mid-afternoon but lost 157 points in the last half hour trading. For the day Sensex oscillated for 366 points or 3%.

Large caps mostly traded down, up and then down again. Autos, infrastructure, cement and pharma stocks declined at close. IT companies lost for the day led by a decline in Satyam Computer. Infosys rose 1% to Rs. 3,156 as the company board meets to discuss stock bonus issue on April 14th. ACC, Cement maker, rose 4.5% to Rs. 876 and traded lower from the day’s high of Rs. 918, after company denied rumors of stock split. ACC is to lead release of earnings season for the year fiscal 2006 on April 12th. Market has discounted good earnings season for the fiscal 2006 and 2007 and market may come under heavy selling if companies fail to meet the expectations. Jet Airways rose 4% to Rs. 1,023 on large block trading of 170,000 shares. Aditya Birla Nuvo rose 6% to Rs. 610 and Indo Gulf rose 9% on the news that the merger between the two companies have been approved and schedule to complete by September 1st, 2006. Gujarat Ambuja Export rose 20% on the news that Reliance Capital Mutual Fund has bought 5 million shares. The company split 5 to 1 stock earlier in the year on robust earnings and revenue growth.

[R] 8:15 AM European averages traded flat at mid-day.[/R]
European markets traded in a tight range at mid-day, reflecting cautiousness ahead of U.S. jobs report and news that BAE Systems is selling its stake in Airbus. Aerospace company BAE Systems dropped 1.9% after it announced it is in talks to sell its 20% shareholding in plane maker Airbus to European aerospace giant EADS. The German DAX 30 inched up 0.01%, the French CAC 40 edged down 0.01%, while London FTSE 100 gained 0.3%.


[R]7:45AM Asia advanced. The Nikkei and Hang Seng hit 51/2-year highs.[/R]
Asian-Pacific benchmarks finished largely in the positive, with tech stocks tracing U.S. gains to provide a boost to the market sentiment. The Nikkei reversed from early losses to close the session up 0.4% at 17,563.37, the highest level in nearly six years. The index, which has recently been strong on fresh fund investments into blue-chip, auto and banking stocks, was supported by gains for blue-chip and tech companies. Among the leading gainers, major game maker Nintendo rose 2.8%, Kyocera was up 3.5% and Toshiba jumped higher by 2.3%. Across the region, Hong Kong''s Hang Seng advanced for a fourth consecutive session, rising 0.4% to a 51/2-year high on flows of speculative funds. Shares of China Mobile rose 1.6%. Taiwan Weighted index climbed 0.3% on strong semiconductor and tourist companies.