The American economy provides the first glimmer of hope in a recessionary economy. With reports of the first quarter labor surveys filtering in, it seems that 287000 jobs have been added by June which has gone above the cautious estimate of 180,000 that was predicted by the economy experts. It definitely is accompanied by a jump in payrolls as well, which has been the biggest in the last eight months. The unemployment rate has climbed up slightly, but that could be due to the additional number of people who joined up in the labor force of the country in the first quarter. The participation rate is up by 62.7% in the month of June.
Impact on unemployment
The unemployment rate has increased marginally, from 8.2% for African Americans to 8.6%, while for the Latino Americans the unemployment rate has gone up to 5.8% from 5.6%. Both figures show marginal increases that should not be cause for concern. Hourly earnings at an average have increased if you compare the year over year figures. The increase has been from 2.6% to 2.7%.
Job additions and resultant impact
The job additions have come primarily in the non farming sector but it is not time yet to fully rejoice. The weaknesses witnessed in the job sectors have not been covered fully as yet. The reports that came in May were dismal, but June reports showed improvement. US companies reported adding a paltry figure of 38000 additions in payrolls. The number was short of what the economists predicted. The May figure was revised lower while the April figures were revised up. However, the overall picture is positive as is being seen by most economists. The global implications also reflect the health of the world’s economy. The US job market reflects the monetary policy and the direction that it is moving toward. There are implications too for the currency and bond markets. US payrolls show that investors are waiting for confirmation that weaker currency is not leading to a weaker trend. The Feds are also watching the job scenario closely. It is a mandate of the Federal Reserve that the country should have full employment. If there are deteriorating trends seen in the job markets the Feds would respond by making the monetary policy looser.
Cautious outlook remains
The Job Report In May had been disappointing for which the Feds decided not to increase the interest rates. The pace of pickup in the labor market is not yet fast enough, but the economic activities have stepped up in general. Job gains need to raise more though unemployment rates have gone down. In general, the economists are making cautious predictions in light of the slowly improving world economy. With added jobs and a positive outlook in general, it is hoped that recovery would be more positive in the second quarter. That would certainly signal the Feds To Start Hiking Interest Rates.