Daily Brief: The US Lost Jobs, But Bad News Can Be Good News

Daily Brief: The US Lost Jobs, But Bad News Can Be Good News

about 3 years ago3 mins

Mentioned in story

Data out on Friday showed the US economy lost 140,000 jobs in December, since there only seems to be one thing on the hospitality industry’s menu these days.

What does this mean?

Economists kept their expectations in check heading into the announcement, predicting the US would add a modest 50,000 jobs. But with coronavirus thumbing its nose at the very idea of yuletide generosity, job creation ground to a complete halt. And while the unemployment rate might’ve held steady at 6.7%, it didn’t drop like it had done for the previous seven months either.

Monthly job growth

Pandemic-driven restrictions have been taking a particular toll on bars and restaurants, which cut nearly half a million positions between them. That goes some way to show how much economic damage the leisure and hospitality industries are having to bear – especially when you consider that sectors like construction and retail did manage to create new jobs.

Jobless rate remains at 6.7% in December

Why should I care?

The bigger picture: Keep it coming.

The monthly US jobs report is a good indicator of how the overall economy’s doing, so investors tend to pay pretty close attention to it. That said, they seemed to shrug off December’s disappointing update with a “bad news is good news” investment mentality. See, the Democratic victory in the Senate elections last week already makes another coronavirus support package likely to arrive soon. Throw in some demoralizing economic data like this, and the chances that the government will pump more money into the economy just keep rising.

Zooming out: Fooled you.

Europe reported a small drop in its employment rate for the second month in a row, with the number inching down to 8.3% in November. That came as a surprise to economists who had expected it to rise, but they might not be wrong: that figure doesn’t take into account all the people who’ve given up looking for work altogether – including those who have kids to look after now school closures are back with a vengeance.

Keep reading for our next story...

TSMC's Chipper Earnings Bode Well For Apple Investors

TSMC image

TSMC has some good news to share with Apple’s investors: the chipmaker reported strong December sales on Friday.

What does this mean?

TSMC counts Apple as one of its biggest customers, so the chipmaker’s 14% increase in sales from the same time last year isn’t just encouraging news for its own investors: the boost suggests the latest iPhones are flying off the (virtual) shelves too. It wasn’t Apple’s only supplier to give a promising update last week either: iPhone assembler Hon Hai Precision Industry reported better-than-expected revenue in December, while Dialog Semiconductor – a rival chipmaker to TSMC – upped its fourth-quarter sales outlook after stronger-than-expected demand for Apple’s 5G tech.

TSMC December revenue report
Source: TSMC

Why should I care?

For markets: There’s no “I” in “iPhone”.

Signs of high iPhone demand were a welcome arrival for Apple’s investors, especially after the company’s earnings update in October fell short on that front. It was particularly encouraging because they’re the first real indication of how the newest iPhone is performing: its delayed launch meant its sales weren’t included in the update, and the company didn’t offer any hints as to how it was selling. TSMC’s announcement, then, might put investors’ minds at rest, sending them into Apple’s next earnings release – which takes place at the end of this month – with a bit more confidence.

Apple's best seller loses ground in fiscal fourth quarter as new models anticipated

The bigger picture: The doctor won’t see you now.

The outlook for the microchip industry is pretty positive overall – so much so that chipmakers haven’t been able to scale up from the pandemic-induced slump quickly enough. Carmakers are reportedly having to slow down production because there aren’t enough chips to go around, and since they don’t pay nearly as handsomely as the likes of Apple, they’ll have to wait their turn…

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG