This morning the August employment report was released and it has given a nice boost to the stock market today. The private sector job growth for the month was 67,000 jobs. Analysts had been expecting the private sector job growth to be only 20,000 jobs. The unemployment rate stayed edged up to 9.6% in August.

The past few weeks has seen all kinds of important economic information whipsaw the market in both directions. We have seen weekly jobless claims reach 500,000, which hurt the market badly. We have seen impressive manufacturing numbers, which helped the market in a big way. For the individual investor, it is certainly hard to tell what to make of the recent economic numbers.

What should you do in this kind of environment with uncertainty about the state of the economy? At this point it seems the economic recovery is still continuing, albeit at an extremely slow pace. As I have said many times before, the biggest key will always be the employment market. If employers start hiring on a larger scale, the growth for the overall economy will definitely show up.

Keep in mind that often times in a recovery from such a terrible recession like the one we saw in 2008 and 2009 it takes quite a while for the growth to get back into high gear. Why is this the case? Quite frankly, everyone is a little scared to invest their money. Personal investors are worried that the same market crash could occur that happened in late 2008. Institutions and money managers are waiting for more clear signs that the economy is strengthening. At the same time, corporations are also scared to put their cash to work. This is precisely why we see so many companies with huge amounts of cash on their balance sheet today.

I think for the next few weeks and months it would be wise to take a wait and see approach to the state of the economy and the stock market. Watch the weekly jobless claims number and the important economic data closely. If you need to be invested in the market in the short-term, it would be wise to consider high dividend yielding stocks because of their relative safety.

Mergers and acquisition activity, often called M&A, can be a great sign of the economic times. When the economy is in the dumps companies don’t want to open up their books and spend, so activity is slow. As companies become more confident about the economic environment they usually start to look for business opportunities that can help them grow. Both yesterday and today there has been a huge increase in the M&A activity on Wall Street, and there is no doubt that investors are taking notice.

Yesterday it was the Prudential and AIG deal that took center stage and for good reason. Prudential purchased the Asian operations of AIG for a whopping $35.5 billion. That certainly doesn’t sound like something that a company would do when they believe the global economy is in shambles. The simple fact that AIG was involved in this transaction also lifted the spirit of investors, since AIG is one of the main culprits for this financial crisis that has occurred in the past couple of years.

Today we have word that the fertilizer industry is ripe for M&A activity between major players. This is another space where companies with cash on hand appear willing to wheel and deal in an improved economic environment.

As individual investors the increase in mergers and acquisitions should definitely encourage you. Large companies that are stocked full of cash are often very careful with this cash, but when they start opening up their balance sheet and making deals, it is a true sign of increased optimism. If large companies with a stockpile of cash are more optimistic about the future of the economy then that makes me feel more confident about the direction we may be heading.

As more cash is spent and businesses take a leap of faith, the end result should be a positive one for the stock market and consumers as a whole!