November 5, 2022 | Payroll Employment, September JOLTs, Facebook (META), Microsoft Workers & Traditional and Roth IRA Income Limits

Payroll Employment

Another good report for the labor market as payroll employment climbed by 261,000 in the month of October. This topped the estimate of 205,000 but was the slowest pace of gains we have seen since December 2020. Although this may sound concerning, after recouping the losses that were generated from Covid we have anticipated the labor market to slow. There is a big difference between slowing and declining. For a good reference point, if you go back to 1939 the average monthly gain in payrolls is around 122,700. The job growth was broad-based as every category saw gains in the month. Healthcare and social assistance led the way with a gain of 71,000 jobs. That was followed by professional & business services at a gain of 39,000, leisure and hospitality at a gain of 35,000, and manufacturing was up 32,000. The major problem within the report is that it does not provide much evidence for the Fed to let off the brakes, especially considering the wage inflation of 4.7% compared to last year. 

 

September JOLTS

Even with the increase in interest rates, businesses have continued to remain active in the labor market. In the recent September JOLTs report there were 10.7 million job openings. This was an increase of 437,000 openings when compared to August and it easily beat the estimate of 9.85 million openings. At this level there are still 1.9 job openings per available worker. I've said it before, but I'll say it again, if the labor market remains this strong, I do not see a major recession on the horizon.

 

Facebook (META)

Facebook's (META) stock price has fallen through the floor from the 52-week high of $353/share as it now sits around $94/share. I’m sure some people are now thinking wow this is a steal. Before you jump you need to think about a couple of things. The most recent earnings release was the second revenue decline in a row as the company is fighting a tough macro-economic climate. This is coming from growing competition from TikTok and Apple's changes to ad tracking. On top of that, Meta’s reality labs unit had an operating loss of $3.7 billion and they expect the loss to grow even more next year. I think it’s important for an investor to have a very clear understanding of what the future holds for the metaverse. Be careful of earnings estimates for December 2023 of $9.80, I believe in the future weeks these estimates will fall dramatically.

 

Microsoft workers

I recently read an interesting survey from Microsoft which I think is true for the current work environment. A survey of 20,000 people at Microsoft found 87% of the employees said they were productive at work. Unfortunately, when asking the leaders at Microsoft only 12% said they have confidence that workers are being productive. There appears to be a big difference in what employees think they are doing and what employers believe they are doing. I feel perhaps maybe it’s always been that way over the last hundred years, but maybe now employees are more vocal since the job market is so strong and they feel confident that they could get another job somewhere else If they were to lose their current one.

 

Harrison - "Traditional and Roth IRA Income Limits"