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Friday, August 3, 2012

U.S. job growth above expectations in July







While the forecast was for July growth of just 100,000 jobs the actual number was over fifty per cent higher at 160,000. This is the most workers to be hired in the last five months. At the same time unemployment rose slightly to 8.3 per cent.


The increased unemployment may cause investors to believe that there could still be government attempts to stimulate the economy later. However the high employment numbers led to double digit gains in the DOW Jones index this morning (August 3rd) Even though more people have given up the search for work the jobless rate rose from 8.2 per cent to 8.3 per cent last month.


One can expect the Democrats to crow about the big increase in job numbers and the Republicans to complain about the slight increase in unemployment. Numbers from one month however fail to tell much about longer term trends.


Employment figures for May and June were revised downward slightly and indicate that 6,000 fewer jobs were generated than reported ealier. In spite of the July increase in jobs many economists think that at the next policy meeting of the Fed in September a third round of quantitative easing through bond purchases may be initiated.


To stimulate borrowing and investment interest rates have been kept almost at zero by the Federal authorities. They have also pumped almost $2.3 trillion into the economy. In spite of these actions the U.S. economy is slowing down and growing only slowly during 2012.


The economic situation may hurt Obama's reelection chances, A recent Ipsos/Thomson Reuters poll shows 36 per cent of registered voters believe that Romney has a better economic plan than Obama. This contrasts with only 31 per cent who think that Obama has the better plan. While the economy is an important issues no doubt other issues as well will play an important role in the election. For more see this article.

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