In the wake of a bad employment report, the gold and silver momo crowd has been running up the metals with loud proclamations that QE3 is now certain. A careful study does not support such proclamations.

Good Friday was one of those rare days when the U.S. stock market was closed and monthly employment data was released. Monthly employment data is known as the mother of all numbers. This name underscores its importance.

The futures market was open when the data was released. Stock futures fell sharply and bond futures rose as investors focused on the headline number of the creation of 120,000 jobs in March. Consensus expectation was 203,000. Whisper numbers were higher than 225,000. Unemployment rate fell to 8.2% from 8.3%.

Negatives in the employment report

On a deeper look, there are a number of negatives in the report.

1. The aggregated hours worked is down 0.2%.

2. The participation rate is down 0.4% year over year. This means 2.3 million workers are no longer in the labor pool.

3. Broad weakness in service sector jobs.

4. No big pick up in construction jobs against some expectations.

Bearish analysts are falling all over themselves in commenting that the job report is very bad and the U.S. economic recovery is now in doubt. Some are even calling for QE3.

Positives in the employment report

1. Manufacturing added 37,000 jobs.

2. Feb jobs increase was revised higher to 240,000 from 227,000, but the January jobs number was revised lower by 9,000 to 275,000.

The models see silver lining

1. Warm weather in November, January, and February pushed some jobs ahead in those months, leading to slower job growth in March….Read more at MarketWatch