Economic News in Review Greenville SC
Here is last week’s Economic News in Review Greenville SC.
Last week was filled with unexpected employment news shockers, including April seeing the lowest rate of unemployment since 2008 and a surprise increase in initial jobless claims. Meanwhile, personal incomes and spending gained momentum.
Unemployment
The U.S. economy added a whopping 288,000 jobs in April, bringing the unemployment rate down to 6.3 percent from 6.7 in March, the Bureau of Labor Statistics reported last week. This was the lowest unemployment rate since its lowest level since September 2008, and beat analyst’s expectations of a 6.6 percent rate with 215,000 new jobs.
All in all, there were 9.8 million Americans out of work in April, the Bureau stated, which was down by 733,000. The number of long-term unemployed people (those out of work for 27 weeks or longer) dropped by 287,000 in April to 3.5 million. The number of Americans involuntarily employed on a part-time for economic reasons such as their hours had been cut, or they could not find full-time work, little change and hovered at 7.5 million for the month.
Less clear was how the figures jived with the labor participation rate (the rate of employable Americans actively involved in looking for work). The labor force participation rate notched down by 0.4 percent in April to 62.8 percent. However, the civilian labor force dropped by 806,000 (this followed an increase of 503,000 in March). The Bureau noted that the participation rate has exhibited no clear trend over recent months and currently is the same as it was this past October.
Regardless, many analysts pointed to the report as evidence of a positive overall trend.
Gains in the jobs market have been good for some time, but recent results continue to point to a gathering strength in recent months, despite the poor economic growth of the first quarter, said Jim Baird, CIO of Plante Moran Financial Advisors in a public statement.
Initial Jobless Claims
While April showed surprise good news, more recent employment scores brought a disappointing shock: initial jobless claims hit a nine-week high, according to last week’s report from the Employment and Training Administration.
First-time claims filed by the newly unemployed during the week ending April 26, 344,000, an increase of 14,000 from the previous week's revised level, the Administration reported. Forecasts for the week were at 325,000.
That said, the four-week moving average, which is considered a more reliable measure of near-term unemployment scores, bumped up just 3,000 claims to hit 320,000.
So why were analysts off in their forecasts? Seasonal volatility. Spring break, plus religious holiday such as Passover and Easter make it difficult for job market watchers to predict accurately (yet another reason to always check the four-week moving average).
Incomes and Spending
Turning from employment news, incomes and spending were up for March, according to last week’s report from the Bureau of Economic Analysis. Personal income grew by $78.4 billion, or 0.5 percent, and disposable personal income (DPI; income after taxes) increased $68.0 billion, or 0.5 percent, the Bureau reported.
Likewise, personal consumption expenditures (PCE) were up, growing by $107.2 billion, or 0.9 percent, for the month. Personal outlays, which comprise PCE, interest payments and transfers, increased $109.7 billion in March.
Looking at savings, personal saving, which is DPI minus personal outlays, dropped to $487.7 billion in March, compared with $529.4 billion in February. The personal saving rate, which is personal saving as a percentage of DPI, dipped to 3.8 percent in March, compared with 4.2 percent in February.
Improving weather accounted for a good deal of income improvement and increases in spending, according to Paul Dales of Capital Economics, as did the Affordable Care Act sign-ups.
The weather-related rebound may now have run its course, Dales told Business Insider. The rush to take out a healthcare policy before the end of March, however, means that healthcare spending could rise rapidly in April too.
This week we can expect:
- Tuesday — March balance of trade from the Census Bureau and the Bureau of Economic Analysis.
- Wednesday — Preliminary First Quarter productivity scores from the Bureau of Labor Statistics; March consumer credit totals from the Federal Reserve.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration.
- Friday — March wholesale inventories from the Census Bureau.
Economic News in Review Greenville SC
Have a Big day,
Randy
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