The April Employment Situation report due to be released on Friday will further clarify the strength of the consumer and either provide current "green shooters" with more ammunition to buy U.S. equities or contrarily check their sense of reality. However there are some significant inferences to be made from the data released Thursday. The continuing jobless claims trend lengthened to 14 straight weeks of labor onslaught, clocking in a new record of 6,351,000 individuals collecting unemployed benefits. 

The Productivity and Costs report released by the Bureau of Labor Statistics (BLS) also suggests that firms endured increased levels of stress in Q1 2009. The business sector, which identifies workers in traditionally "white collar" jobs, managed a -7.8% quarterly change in output (demand) more effectively by cutting working hours by -8.8%. The result is a 1.1% "recessionary improvement" in productivity and may signal that the professional job market has found firmer ground.

But most concerning was the -22.4% change in manufacturing output, which even a -19.7% drop in working hours couldn't support in Q1. As the industry failed to cut workers as quickly as demand, the cost per unit of labor increased 16.7% in the first quarter. The resulting drop in manufacturing productivity by a factor of -3.4% is alarming to say the least and may foreshadow more pain to come in the manufacturing industry. 

There is hope that consumers will begin to buy again and thus prompt retailers to coax supply through the chain, thus benefiting manufacturers. Whether this hope is founded in stimulus dollars beginning to pump, tax cuts/rebates, or decreased fear of job losses differs from bull to bull.

The market has acted as if the economy is at an inflection point, while the economy whispers through ignored indicators that the market may be the entity needing some inflection. The euphoric flight to nowhere has been historic… hopefully the fall to reality won't crumble the foundation on which the rally has been built.