The job market in the U.S. rebounded in the month of April 2015 as per the government data released recently, which is due to ease concerns that the economy was on the edge of another extended slowdown after a tough winter in which the overall economy stalled. The growth in jobs failed to give impression once again of any major improvement in pay.
Employers add on 223,000 positions in the month of April 2015, according to the Labor department. The unemployment rate declined to 5.4%, which is a recovery after showing a disappointing performance in March 2015, which in the beginning was reported as a modest 126,000 gain and eventually then revised down to 85,000 positions.
It is a set of numbers that must have Americans breathing a sigh of relief after witnessing that March jobs report did not come anywhere close to predictions, but they did actually revise December through February numbers down as well. The data that was taken last month shows a sign that the economy would be facing another slowdown, which now looks as though it might be the outcome of unique circumstances.
Still, one can point out the weak jobs report was the result of bad winter weather that is obviously short term and did not persist for long. We estimated a rebound in the job market, and that follows the numbers in March, and we got it but not much as wage growth is still the missing factor.
Before the March job market release, several economists expected that average hourly earnings would rise 0.2% or more in the month of April, which indicates an upswing from the slow pace of wage gains since the end of the recession. The average hourly rose just by 0.1% in the month of April, which produced a 2.2% gain annually. This shows that any meaningful wage gains for most workers are still delayed despite the steadily falling unemployment rate.
The absence of wage pressure hinted that the Federal Reserve would not be in a rush to take its initiatives in raising short-term interest rates, which has been to zero level since 2008. Many economists were expecting that the Fed to increase the rate in June but the consensus now shifted to September or beyond as the probable beginning of any gradual increase in interest rates by the Fed.
The major question looking forward is how April’s job report would impact the Federal Reserve Bank’s decision about interest rate increase. The central bank has kept interest rates at or near 0% for several years in an effort to gain on hiring and economic growth improvement. Moreover, in the beginning of the year the central bank discuss the option of raising rates to increase that is mainly done when the labor market has tightened, which is done to slower hiring and protect from inflationary cycles.
Further, after the Bureau of Labor Statistics reported a weak data for March, so what had seemed to be a possible June rate hike was shifted back to the fall or later as the job market appears to be far weaker than what had been assumed before. Moreover, April’s job market data shows a return to growth making the results otherwise ambiguous enough that the central bank might choose to continue holding off an interest rate hike any soon. At 5.4%, the unemployment rate seems to be at its lowest point since the spring of 2008, and it has been down sharply from 8% early in 2013.
The conclusion is that job market data is improving, but at a lesser pace than what had been expected a year ago. Analysts across the U.S. are hoping the government will find a worthy strategy to increase job prospecting in the nation.
