U.S. Unemployment Rate Falls Amidst High Food and Energy Prices

Sources:
FT:US Jobless Claims Fall to 409,000; Mixed US Economic Picture as Jobless Claims Fall Back
Economist: America's Labour Market Perking Up
BLS: Commissioner's Statement on the Employment Situation

Earlier this month, the U.S. Bureau of Labor Statistics released its monthly statement explaining the employment situation in the United States. According to the report, the labor market is showing increased recovery and growth. In April, nonfarm payroll employment, which includes the total number of paid U.S. workers of workers of any business excluding government employees, farm employees, and private household employees, increased by 244,000, compared to its average of 104,000 in the previous three months. Likewise, private-sector employment increased by 268,000 jobs, following an average of 250,000 in the previous three months.

The increase in employment was prominent in service-providing industries, manufacturing, and mining. The manufacturing sector has added 141,000 jobs since the beginning of this year alone. Similarly, retail employment grew significantly in April by 57,000, signaling that consumers are not cutting back on their spending despite high oil prices. Such a rise in employment can considerably boost spending, as individuals who were previously unemployed now have a source of income. These individuals will start purchasing more goods and services, thus increasing spending in the economy. The high demand for products will in turn create more jobs as companies will begin employing more workers in order to meet the demand for their products.

Moreover, there are signs that employment will continue to increase in the months to come. For instance, first-time claims for jobless benefits fell by 29,000, to 409,000 in the week ending May 14, compared to 438,000 the week before. Likewise, continuing claims for benefits also decreased by 81,000, to 3.71 million in the week ending May 7. States such as New York, Wisconsin, and Ohio recorded the largest drops in initial claims, while Alabama, California and Puerto Rico had the biggest jumps in claims.