Why Should You Care About the July Jobs Report?
If you listen to talk radio, read a newspaper, or watch any sort of financial news show, you probably heard about the July jobs report. Reports like this always give the media something to talk about. But if you’re like most investors, it’s tough to really get much useful information out of reports like this.
Today, I want to help you change this.
Economic reports don’t have to be boring, mysterious, or elusive. As an individual investor, you can actually get useful information from these reports. Information that can help you pull more income from the markets.
Let’s take a look at the July jobs report to see how you can use this information to build your family’s wealth.
The July Jobs Report: What Did It Tell Us?
Every month, the Bureau of Labor Statistics (BLS) issues its monthly jobs report. This report is helpful because it tells us how many jobs the U.S. economy created last month, along with some other important data.
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For the month of July the BLS reported that 255,00 U.S. jobs were created. This was much better than the 179,000 economists were expecting.
Also, in addition to more jobs created, the quality of jobs in the U.S. has improved. This can be seen in the 2.9% increase in average hourly earnings. That’s the strongest growth in wages since 2009.
This chart from the Wall Street Journal does a good job of showing how wage growth has accelerated over the last few months.
Professional areas such as technology, architecture and engineering represented the biggest growth areas. The medical sector was also very strong with 43,000 health care jobs added.
The July jobs report essentially proved that the U.S. economy is growing, and that key areas of the market are expanding fast enough to require more workers. This report doesn’t indicate tremendous growth, but it was significantly stronger than most professional investors and economists were expecting.
Actual Numbers Versus Expectations
When I review economic reports like this, I focus on the difference between the actual numbers and expectations. This is helpful, because surprises are actually what drive market prices higher.
Think about it this way…
Big investment companies like mutual funds, insurance companies and pension plans do their research ahead of time. They expect a certain amount of growth, and they position their portfolios accordingly. They may take aggressive positions if they expect a strong report. Or they may reduce their risk if they expect the economy to slow.
The surprise element is what causes these investors to change their opinions. And of course with new opinions, these large investors will change their positions.
Remember, the largest investors are the ones who actually move markets with their buying and selling decisions.
Thats why I like to focus on the difference between what is expected, and what is reported. The July jobs report caught institutional investors off guard.
Investors were expecting modest growth. But during the month of July, business expanded more than expected. Companies hired more workers. And those workers now have paychecks. Workers have larger paychecks thanks to higher wage growth.
So now that we know more about what is going on, it’s time to look at how we can profit from the July jobs report.
Investments That Should Benefit From the July Jobs Report
The July jobs report showed us that employment is growing steadily. Of course it could be better. But economists generally believe that additions of 200,000 jobs or more each month is a positive thing.
When more people have jobs, consumer spending naturally picks up. We’ve already seen that trend in play this year as consumer spending has been the primary driver of U.S. growth. Take a look at the chart below. This shows a significant jump in personal consumption (or spending) during the second quarter.
One of my favorite areas of the market right now is the retail sector.
But I’m not looking at just any retail stock. The retail stocks that I like the best are tied to the housing market. That’s because low interest rates are driving demand for new homes. And with more workers able to find employment, this trend should continue.
What do consumers do after they buy homes?
They buy furnishings… appliances… and bedding. And plenty of other things to fill their homes and yards.
Lately, I’ve been looking for ways to invest in companies that benefit from strong consumer spending and from a strong housing market. You probably remember my bullish article on Williams Sonoma (WSM) from a few weeks ago. The stock still looks like a great value to me.
Also, on Tuesday I’ll be recommending a related put-selling opportunity for subscribers to Income on Demand. This opportunity is tied to a home furnishing store that is in the middle of a turnaround process, and is trading at a deep discount. But strong consumer spending and a growing housing market should send shares higher.
A Better Way to Generate Income
Remember, you don’t have to buy shares of your favorite stocks to profit from them. Often, your best bet is to sell put contracts and collect instant income.
When you sell a put contract, you’re entering an agreement to buy shares of stock. But only for a limited time. And only if they’re trading below the “fair price” you set ahead of time.
You don’t have to already own a put contract to sell one. By “selling” this contract, you’re simply entering a contract — or entering an agreement. And you’re getting paid immediately to enter that agreement.
This is a great way to grow your income steadily over time. And if you’re living from the income your retirement account generates, this strategy can be extremely valuable.
If you’d like to learn more about this strategy, please let me know!
You can email me (Zach@ZachScheidt.com) or simply respond in the comments below.
And if you’re ready to take the next step and start using this strategy to capture your own income, you really should check out my Income on Demand trading service. That’s where I show you exactly how to sell put contracts, and I give you a new opportunity you can use in your own account — every single Tuesday morning!
Click the link above to sign up!