The monthly Labor Department employment report was in the range of analyst expectations, and brings the monthly job gain for 2015 at a 211,000 new jobs per month average – with the last three month averaging 235,000 new employment opportunities. The numbers for May and June have also been revised to add a further 14,000 jobs taken during those months.
Unemployment is also staying at a seven year low figure of 5.3 percent, with lay-offs being a rarer occurrence. The number of people filing for unemployment benefits in June was also at its lowest since the 70’s; while employment amongst women over the age of 55 has also risen significantly.
This might prompt the Federal Reserve to finally settle on a much anticipated interest rate hike for federal funds. The interest rate for them has been kept at zero during the recession to stimulate economic recovery, and Chairwoman Janet Yellen has already spoken positively about the measure earlier this year.
Investors are critical of the idea and claim that it would only work to further hinder an already slow pace of economic growth. But jobs being added at a steady rate and low unemployment are some of the signals of a healthy and recovering post-recession economy, and so the Federal Reserve might commit to the change at its 16-17 September meeting; the feds also assured that any rate hike would be handled gently so as to not derail economic growth.
But the Labor Department’s report also has some arguments against the change. Despite a healthy job market, low unemployment and rising house sales, hourly wages have continued their lackluster growth pattern, being up by only 0.2 per cent in July. On an annualized rate, hourly wages have grown only 2.1 per cent since July 2014. This gives consumers less financial flexibility than optimal and makes considering long-term personal investments a tricky affair.
This might be cause by a lack of employee motivation, as productivity in the first half of the year has gone down by 3.1 per cent. This could be one of the less pleasant consequences of a low unemployment pool, as employers of laying off unproductive workers due to fears of not having too much choice in the way of adequate replacement.
Image Source: USA Today