Job Data Shows Improvement as Global Stocks Tumble

Three separate studies show improvement in the U.S. job market, but investors globally express concern that growth expectations extend far beyond reality.  The Gallup Good Jobs index, which measures jobs that offer 30+ hours per week of employment and a regular paycheck, saw a small improvement. According to new data released Thursday, the index rose 0.1 point to 45.3 percent in December, above the 44.9 percent reading in November.

Three separate studies show improvement in the U.S. job market, but investors globally express concern that growth expectations extend far beyond reality.  The Gallup Good Jobs index, which measures jobs that offer 30+ hours per week of employment and a regular paycheck, saw a small improvement. According to new data released Thursday, the index rose 0.1 point to 45.3 percent in December, above the 44.9 percent reading in November.

While the indicator suggests that job growth and unemployment declines in the United States are not limited to low-paying work, the study also showed that labor participation remains weak. The study saw workforce participation rate decline to 67.3 percent, down 20 basis points from November.

Meanwhile, the U.S. Department of Labor announced a decline in unemployment claims, which fell 10,000 to 277,000. That is still higher than analysts’ expectations of 272,000 claims, but is well below the prior reading of 287,000.

As with the Gallup study, a darker underbelly to the data lies underneath. Continuing claims rose 1.1 percent to 2.23M from the prior reading, which could indicate that long-term unemployment—often a leading indicator of recessionary trends—may be worsening as laid off workers struggle to get new positions.

A third report by independent labor research firm Challenger, Gray & Christmas notes that employers slashed 23,622 jobs in December, a sharp decline from 30,953 in November. Confirming both the DOL and Gallup studies, the Challenger report hints at an improving labor market in which jobs are easier to come by and less people are losing work than in the past.

Equity Market Fears Worsen

While some improvement for workers is in the mixed data, investors are feeling much less upbeat about Americans’ abilities to spend and produce corporate profits.

China suspended equity trading for the second time this week in less than half an hour, after the Shanghai Composite Index cratered by over 7 percent in a matter of minutes.

Across Europe, the stock rout continued with Germany losing over 2 percent, France losing over 1.5 percent, Spain losing 1.3 percent, and Britain losing nearly 2 percent.

At one point, U.S. futures fell over 2.3 percent, but steadily recovered in trading Thursday as analysts noted job strength, cheaper gas and energy costs, and a strengthening dollar could bolster demand at home, even as growth abroad weakened.

To punctuate the weakness in global economic growth, the World Bank downgraded its forecasts for the third year in a row, predicting a 0.4 percentage point decline in 2016 growth compared to the prior year. The World Bank sees global growth at 2.9 percent, with U.S. growth at 2.7 percent.

However, the World Bank noted that America was relatively strong when compared to the rest of the world, with a strengthening dollar and weakening exports being the largest drags on the U.S. economy.