Last week was a strong week of performance on the market. The week was capped off on Friday with strong jobs data.

Employment Situation

Much of the week was buoyed by strengthening oil prices, climbing off the floor and returning the $50 to $60 range. The first Friday of every month is known as jobs Friday, where we find out the health of the job markets from the prior month. This past Friday did not disappoint.

Nonfarm payrolls added 257,000 jobs in January, much stronger than the 234,000 expected. Not only was January strong, but November and Decembers figures were revised up, reflecting an additional 147,000 jobs that were created[1]. This also marks 12 straight months with job gains in excess of 200,000, the first time this has been achieved since 1995[2]!

Average hourly earnings increased 0.5%, month over month and nonfarm productivity fell 1.8%[3]. Both are indicators that greater capital expenditures by companies for future growth are likely. This being the case earnings may suffer in the short-term in order to expand long-term revenues.

All that said, the unemployment rate went up to 5.7% from 5.6%. While typically a bad sign, the underlying participation rate had increased 0.2 to 62.9% as people became more optimistic about employment prospects[4]. This increased the overall unemployment rate, but in a good way.

International

China is coming off their weakest GDP performance in decades. In response, the Peoples Bank of China has lowered reserve requirements. This should allow companies to freely invest money in their businesses.

Greece and the rest of the EU are locked in an anti-austerity stand-off. After enjoying the funds related to its bail out over the last four years, Greece has decided that they are not okay with the strings attached to their original arrangement. While I’ll be the first to say that austerity on a failing economy is like kicking someone when they’re already down, Greece appears to be taking a drastic stance that could cause a more dramatic downturn in the European economy.

The Russian economy has suffered tremendously from, first, sanctions from western nations over their actions in Ukraine, second, embattled oil prices. With their heavy dependence on oil exports their economy is projected to contract 3.2% during the first half of 2015[5].

In conclusion, last week’s data points to a continued strengthening dollar against uneasy conditions abroad. Increases in oil could stabilize inflation internationally and bring exports back into better balance in the US.

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Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long term holding strategy is the best strategy in any market environment.

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[1] www.mfs.com – week in review

[2] www.troweprice.com – weekly market wrap-ups

[3] www.investing.com – economic calendar

[4] www.investing.com – economic calendar

[5] www.mfs.com – week in review