The jobs report issued last month gave encouraging signs of a distinct recovery in the job growth in comparison with what has been happening since the last five years. It is suggestive of the fact that in a span of five years, the economy of the United States of America is coming back to a more normal and healthier growth pattern.
Initial Unemployment Claims
Here is a user interactive chart depicting initial unemployment claims (Source: United States Employment and Training Administration). Initial Claims have dropped from a high of 660000 claims filed in the week of March 7th 2009 to 280000 claims filed on Dec 20th 2014.The chart shows a consistent dropping trend.
Things have been going right for the economy lately as the initial weekly unemployment claims have fallen from 289,000 to 280,000 comparing data for just 1 week. The economists had predicted that the figure would be in excess of 300,000. The Department of Labor has also indicated that were no extraordinary factors that had an impact on these initial claims. The figure has been declining since the past four weeks. The four-week moving average for initial claims has now been below the three hundred thousand mark actually for the last three months. This is a sign that involuntary separations are at their lowest.
Civilian Unemployment Rate
Civilian Unemployment Rate shows a comparable trend in line with initial claims filed.(Source: United States Bureau of Labor Statistics.) .From a high of 10% on October 1st 2009 the unemployment rate has consistently dropped to 5.8% in the November 2014. See user interactive Chart below
The unemployment rate represents the number of unemployed as a percentage of the labor force. Labor force data are restricted to people 16 years of age and older, who currently reside in 1 of the 50 states or the District of Columbia, who do not reside in institutions (e.g., penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces.
This rate is also defined as the U-3 measure of labor underutilization.
As per reports from the Chief Financial Economist at the MUFG Union bank in New York, companies are not firing workers on account of a weak demand recession condition. This indicates that unemployment will continue to decline at a rapid rate. The Conference Board has released a survey of consumers from across the country that reported that the households were totally upbeat as compared to past several years about the high prospects of getting jobs.
As the unemployment rate has settled to 5.8% at the end of last month, reports have placed the economy of the United States of America to be on course for its best year as far as job growth has been concerned in the last fifteen years.
Total Non Farm Payroll Monthly Seasonally Adjusted
(Source: United States Bureau of Labor Statistics). From a low of 129.655 Mn in February 2010 the total non farm payroll has risen to 140.045 Mn in November 2014.Change over the last alone is 321000 new jobs created. The first chart below shows the total non farm payroll monthly seasonally adjusted and the second chart indicates the change in non farm monthly seasonally adjusted payroll.
All Employees: Total Nonfarm, commonly known as Total Nonfarm Payroll, is a measure of the number of U.S. workers in the economy that excludes proprietors, private household employees, unpaid volunteers, farm employees, and the unincorporated self-employed. This measure accounts for approximately 80 percent of the workers who contribute to Gross Domestic Product (GDP). This measure provides useful insights into the current economic situation because it can represent the number of jobs added or lost in an economy. Increases in employment might indicate that businesses are hiring which might also suggest that businesses are growing. Additionally, those who are newly employed have increased their personal incomes, which means (all else constant) their disposable incomes have also increased, thus fostering further economic expansion. Generally, the U.S. labor force and levels of employment and unemployment are subject to fluctuations due to seasonal changes in weather, major holidays, and the opening and closing of schools. The Bureau of Labor Statistics (BLS) adjusts the data to offset the seasonal effects to show non-seasonal changes: for example, women’s participation in the labor force; or a general decline in the number of employees, a possible indication of a downturn in the economy. To closely examine seasonal and non-seasonal changes, the BLS releases two monthly statistical measures: the seasonally adjusted All Employees: Total Nonfarm (PAYEMS) and All Employees: Total Nonfarm (PAYNSA), which is not seasonally adjusted.
The economy has grown at one of its fastest paces in the third quarter of this year when compared with the average scenario in the last eleven years.
Wages have gone up by 0.4% over the last month. This is an equivalent of five per cent at an annualized pace. This pace has been the fastest since the recovery began five years ago. When combined with a jump of 0.6% in the actual hours worked, the rise in wages has been sufficient to push the payroll income up by 0.9% on the month. This may set a brighter outlook for the economy of the United States of America with more workers likely to take home a higher pay. The falling prices in oil are also helping the situation.
Every month, the Current Employment Statistics (CES) Program helps in the survey of about one hundred and forty four thousand government and business agencies representing about five hundred thousand individual worksites for the purpose of providing detailed industry data on number of hours worked, employment and workers’ earnings on nonfarm payrolls. The total nonfarm payroll employment has increased by about three hundred and twenty thousand jobs in November and with the unemployment figure sliding down to 5.8% last month, the job market looks promising with growth in business and professional services, health care services, manufacturing and retail trade.
The dollar has gone up to one of its best levels since 2007. The yield on the rates of interest even on the sensitive two-year Treasuries is up by ten basis points with an increase of 0.65 %. Wages are also up by 0.4% over the previous month and almost by 5% at an annualized rate.
Average Mean Duration of Unemployment
(Source: Bureau of Labor Statistics.) See user interactive chart indicating consistent improvement in the average mean duration of unemployment.
The United States has risen to the rescue of the entire global economy as indicated by one of the best jobs reports overall since the recovery in the job market began five years ago. This kind of recovery has also brought the Standard & Poor’s 500 Index also to new heights with a new record. It has driven the dollar to a high level post recession.