Why the U.S. Jobs Report Could Be Much Worse than Expected


This Says Our Favorite Biotech Is Off to the Races

Shares of a promising biotech we recommended back in February 2013 – jumped as much as 27% to a three-month high of $14.20 yesterday after the company said a new cancer drug met its main goal in a midstage clinical trial.

Its shares backtracked a bit as the day progressed but still closed 17.6% higher for the session. These shares have advanced 361% since we first told you about them. The stock has generated a peak gain of 456%, making it one of the 31 recommendations we’ve made to you that have doubled or better since we launched Private Briefing in August 2011. (More on that later…)

The September U.S. jobs report, the second to last before Election 2012, is expected to show 110,000 jobs added for the month - but there's a chance it could be much uglier.

First, the weekly initial jobless claims out today (Thursday) increased 4,000 to 367,000 for the week ended Sept. 29. Never a good lead in to a jobs report.

Second, the ADP jobs report released Wednesday showed the private sector added 162,000 jobs in September, less than the 189,000 added in August. ADP's report is often skewed to the upside compared to the government's employment numbers.

Data shows that between April and August, ADP estimated nearly 50,000 more private sector jobs were added per month than the government report (widely viewed as more accurate).

But in August, ADP's number overshot the government's by a hefty 98,000.

Equally disturbing is that the number of jobs being added (according to government figures) is nowhere near what is considered healthy. Just to keep up with population growth, our economy needs to add at least 125,000 jobs every month.

At that pace, it would take at least four more years for the U.S. job market to fully recover from the Great Recession.

"We're not going anywhere quickly in the jobs market," Ryan Sweet, senior economist at Moody's Analytics, Inc., told Bloomberg News. "The job market is just more of the same. Layoffs aren't the big problem, it's the lack of hiring."

The number of jobs employers added in August was an uninspiring 96,000, a steep decline from July's 141,000.

And while the unemployment rate eked down to 8.1% from 8.3% the previous month, it was for all the wrong reasons.

Many discouraged Americans have given up looking for a job. Plus, more young adults are prolonging their education in attempts to avert entering a very difficult job market.

And with the following factors, 2013 looks to get even worse.

The remaining content is exclusively for Money Morning subscribers. To gain access, enter your email address:

(After submitting your email address the page will refresh with the full article. You will receive a welcome email from Money Morning including the benefits of your free subscription.)