Heartening Employment Data From USA

Employment is a lagging indicator of the economic cycle. Staff are only laid-off once things have got really bad and are only re-hired once employers are confident that demands on their business are growing. From the perspective of the state, unemployment is problematic since social security costs must be met for the unemployed person and income tax, of course, falls off as the ranks of the unemployed swell. Unemployed people are naturally much more frugal than those in work and an additional consequence of unemployment is that it drives down domestic demand which accounts for the lion’s share of most nations’ economic output.

At a time when America is anxious about the effects of blunt-force spending cuts, ushered in as a result of the sequester, on economic output going forward at last there is some good news to cheer. Figures just released have shown that the US economy generated more jobs in February than had been anticipated, nudging unemployment down to levels last seen in December 2008. 236000 new jobs were created in the US economy in February, pushing unemployment down to 7.7% of the workforce, a decline of 0.2% over the January figure. Analysts had expected that employment would increase by 165000 jobs in February, significantly under the actual level seen.

A recent uptick in housing construction saw 48000 new jobs added; healthcare took on a further 32000 people and the business service and professional sector added 73000 to the pay roll. On the opposite side of the coin 10000 government sector jobs were lost in February. The number of Americans unemployed for more than 27 weeks (defined as long-term unemployed) remained unchanged and accounts for 40% of those unemployed in the USA.

The employment data together with better news from the housing sector was widely credited with sending the Dow Jones index into new record territory. The economic data has led to a strengthening of the Dollar against the Euro, Sterling and the Yen in recent weeks.