United States Announces Falling Unemployment

The Labor Department announced that the United States job market rebounded with the increase of 223,000 work places provided by employers in April.

This is good news for the unemployment rate which saw a decrease to 5.4 percent from over 8 percent only 2 two years ago. It was feared previously that the economic winter stall will loom long into 2015, especially with the disastrous March reports. The April comeback is a sign of stabilization in the job creating sector and brings along economic perks.

Yet, although the creation of work places fell in line with analysts’ predictions and expectations and is perceived as a normal move to stabilize the economy, it has so far failed to translate into significant pay increase.

This moves to enable public frustration and most certainly a flowering political debate during the presidential campaign.

Before the report of the Labor Department was released on Friday, it was expected that pay increase would reach approximately 0.2 percent on an hourly basis. Reports showed that April only saw a 0.1 percent increase, sparking a controversy surrounding the Federal Reserve Policy makers.

The professional and business services fared among the highest job creators, with an addition of 62,000 working places. Both Health and the Constructions sectors brought an addition of 45,000 jobs. It stands in stark contrast with previous years, when the Construction sector alone brought as much as 280,000 places. The biggest losses were registered in the energy sector, with a 15,000 jobs lost in the mining industry and 10,000 job cuts in the mining support activities. The decline of the energy sector is further continued by the loss of 3,000 jobs in the oil and gas extraction industry.

Therefore, even with the decrease in unemployment, the situation doesn’t look too rosy. All measures in view of economic gain should be taken with caution. The Wall Street analysts agree. As the Federal Reserve has the task of shaping the economy, the current stall in wage increase is favoring a wait-and-ponder attitude. Nonetheless, Wall Street commends precautionary principles and on Friday major market indexes reached almost 1.5 percent.

Against this background, the people are faced with a frustrating conundrum. Employment rates are going up, the economy is gaining wind, yet wages seem to be carved in stone for the time being. The Federal Reserve is warning of an inflation risk if with the employment growth comes a hurried wage increase.

What adds to the problem are “missing workers”. This segment is represented by those currently operating on the black market or by people who are forced to take part-time jobs as they cannot find any full-time positions. The latter segment remains at 10.8 percent currently, while the former is signaled at 9.6 percent.

Waiting to see what happens with these potential employees is one of the main arguments behind the Fed reasoning. The job market is currently looking beyond the existing workforce and policy makers are waiting to see if it materializes in a full recovery.

Image Source: dailypost.co.uk