It is quite interesting and even surprising to note how the labor market is getting and standing strong despite the rise in unemployment rates. The trend of a strengthening labor market continues to grow amidst the increasing number of Americans filing for unemployment benefits.
According to a recently announced report, it was revealed how the majority of the U.S. companies have been tumbling as high as eighteen percent in enforcing layoffs among their organization. This is definitely a good news, especially given the fact of how the economy had been appearing to lack potential for the past few weeks. It is slowly gaining momentum as it strives toward stability.
Daniel Silver, an economist at JPMorgan in New York, said, “Through some of the ups and downs in the weekly series, it looks like the trend in initial claims has improved over the past month, signaling that the labor market continues to improve despite weakness in several other recent economic reports.”
According to the Labor Department’s claims, State unemployment benefits went up to 6,000 as it seasonally adjusted to almost 278,000 for the week. However, any number below the 300,000 threshold is said to be a healthy labor market condition. Such a condition has been caused for the first time since 1970s.
At the same time, organizations such as Challenger, Gray and Christmas Inc., a global outplacement consultancy, recently made an announcement of around 61,599 job cuts that took place last month. They further revealed that the layoffs were also seen in the energy sector; especially considering how badly impacted this particular segment has been since the slump in crude oil prices. Moreover, a third report brought to light how employment, in the vast service sectors, began contracting since 2016 started. Companies like the Institute for Supply Management experience a fall in employment with up to 49.7 percent.
However, the latest indications aim toward the fact that the labor markets still have a strong footing, irrespective of the tightening financial market conditions. Private sectors are seen hiring lately, thus causing a pickup in overall job growth.
Adding to this is the labor market data on manufacturing and consumer spending that reinforces the sense of pick. In fact, the Commerce Department even spoke about how new orders for manufactured goods rebounded 1.6 percent as compared to the 2.9 percent figure last year. Besides, there has also been noticed a steady increase in the factory orders.
Experts predict a rise in the interest rates imposed by the Federal Reserve because of the given condition of stabilizing economic growth coupled with increasing inflation and an improving financial market. However, since they already hiked rates in December, the U.S. central bank will most probably not be increasing the rates anytime soon.
Companies are slowly increasing the size of their workforce to help expand the growth of their output. With the purpose of eliminating sustained weakness and soft productivity; numerous organizations are turning to this strategy, and planning to carve a niche in their respective markets.