Monday, 6 December 2010

Recovery in US employment weak but continuing

Last week's employment report shows that the economic recovery in the United States is still producing few jobs.

The Labor Department reported on Friday that nonfarm payroll employment rose 39,000 in November, well below the consensus estimate of 150,000 based on a Bloomberg survey of economists. The unemployment rate rose to 9.8 percent from 9.6 percent in October.

This means that almost one and a half year after the recession ended, employment remains well below the level at the beginning of the recession and the unemployment rate remains close to its recession peak of 10.1 percent.

Nevertheless, other data last week suggest that the recovery in employment will at least continue.

Another report from the Labor Department last week showed that although initial claims for unemployment insurance rose 26,000 to 436,000 in the week ending 27 November, the four-week moving average fell 5,750 to 431,000.

The latter series, which had fallen to around 450,000 in the spring but had refused to fall any lower for several months, appears finally to be trending down again. This could be an early indicator of a prospective decline in unemployment.

Reports from the Institute for Supply Management last week also show that the recovery in the economy and employment in particular remains on track.

The ISM's manufacturing PMI fell to 56.6 in November from 56.9 in October while the manufacturing employment index fell to 57.5 from 57.7. However, both remain well above 50, indicating continued expansion in manufacturing activity.

The ISM's non-manufacturing index improved to 55.0 in November from 54.3 in October while the non-manufacturing employment index improved to 52.7 from 50.9, indicating an acceleration in non-manufacturing activity.

So the recovery in employment in the US since the end of the recession has been weak but it is continuing nevertheless.

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