The Labor Department job report for the month of July is in tone with the current trend, as employers continue to add jobs at a steady rate, signaling a great market growth rate. Across 2015, monthly job growth averages at over 211,000, a healthy figure despite it being below the 246,000 rate registered in 2014.
The figures matched analysts’ expectations and offer a strong argument for the Federal Reserve to commit to the much anticipated interest rate hike, which many think is due for September. The possibility of raising the federal interest rate above the 0 per cent threshold it was set at to stimulate post-recession recovery has been has attracted numerous critics from investor, who consider that it would slow the country’s much needed economic growth.
But with positive employment figures on its hands, the Federal Reserve might finally consider the current situation as the right time for the raise. Chairman Janet Yellen has already spoken in favor of the measure, and an announcement will most probably be made at the Federal Reserve meeting scheduled for 16-17 September.
Unemployment maintained itself at the 7-year-low number of just 5.3 per cent, being now down 2.5 per cent on annualized basis. Jobless claims are also being maintained at their lowest levels since the 70’s, as the rate at which companies are laying off employees is slowing down.
However, there is cause for concern in two major areas – wage rise and overall economic growth. Hourly wage rise has maintained itself at a measly 0.2 per cent monthly rate, being up by 2.1 per cent since July 2014. This just barely surpasses the inflation rate of 1.8 per cent registered in the same period, keeping Americans afloat financially but not offering them too much in terms of financial flexibility. The economy recorded just a 1.5 per cent growth in the first half of the year, being below the last three years’ average by 0.5 per cent.
The low unemployment rates are also a consequence of the fact that the active labor force percentage continues to fall; only 59.3 per cent of adults are now either working or actively searching for a job, with the number of the latter being at an almost half a century low. Productivity also registered a 3.1 per cent annualized slump, being one of the causes for the modest wage growth.
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