The true hallmark of a meaningful recovery is a pick-up in levels of employment as companies hire on new staff to deal with anticipated increasing orders and contracts. The US economy has been steadily putting on new jobs, but the rate has at times been below the number needed to keep up with people entering the job market because of population growth and immigration. However, the data for April has come in well above this level with the creation of 288000 new jobs; this is the best monthly figure since January 2012.
The new impulse of jobs has nudged unemployment down to 6.3% from 6.7% in March, making it the best figure since September 2008. The size of the US workforce varies on a monthly basis for a number of reasons. The April data is being flattered by a marked decline in the workforce for April. April saw 806000 people withdraw from the workforce and this explained much of the apparent reduction in unemployment (by contrast, March saw an expansion of 503000, highlighting the natural ebb and flow in the US workforce).
Of the newly created jobs, the business and professional services sectors accounted for more than one in four posts with 75000 jobs being generated. However, average hourly earnings across the USA private sector only saw a modest 1.9% year-on-year increase in April.
Despite very anaemic Q1 growth of just 0,1%, the Federal Reserve has decided to continue with the “Taper” by reducing asset purchases by a further $10 billion per month to $45 billion. This is the fourth reduction of the Federal Reserve’s asset purchase programme which saw the Fed purchasing $85 billion worth of bonds and securities at its height.