Mecklai: Booming job market signals US economy revival

Mecklai graph of the day: Since 2007, United States has been reeling under pressure to alleviate the high unemployment levels and has undertaken unprecedented measures to curb the same.

March 22, 2013 / 16:21 IST

Mecklai graph of the day: Booming job market

Since 2007, United States has been reeling under pressure to alleviate the high unemployment levels and has undertaken unprecedented measures to curb the same. The efforts seem to have paid off now as evident from release of strong batch of recent economic data from US off late.

In the latest release, initial claims for state unemployment benefits stood at 336k beating its expected forecast of 342k last week. After touching high of 659.25k in March 2009, it has came to it’s lowest to near 5-year low of 336k. The U.S. has added an average of more than 200,000 jobs a month in the past four months in a sharp acceleration from last summer. Recently, the jobless rate also dropped to 7.7 percent from 7.9 percent in January. The lay offs reduced in recent times as companies adopt cautious hiring policy. This shows that the confidence is rising on employment side with economy almost starting to revive. There are growth prospects seen again.

The Federal Reserve in it’s most recent FOMC meet has indicated to continue the asset purchases of $85 billion until the jobless rate falls to 6.5 percent. The possible threat to this improvement could be federal spending cuts in billions that kicked in earlier this month under a law known as a sequester. The companies that do lots of business with the government, particularly defense firms, may have to lay off workers. Other indicators, however, suggest more companies may be looking to hire, so it may take several months to find out if the latest burst of job growth has staying power.

Below graph shows average monthly unemployment claims of US since January 2007