Economic News in Review Greenville SC
Here is last week’s Economic News in Review Greenville SC.
The unemployment rate grew, but so did the number of jobs added to the economy, while lay-offs fell, prompting optimism from labor market watchers. Also, personal incomes grew while spending was essentially flat.
The unemployment rate, a closely watched metric since the 2008 recession sent the job market to the canvas, actually ticked slightly up in May after months of successive declines.
The unemployment notched up to 5.5 percent in May from April’s 5.4 percent, the Bureau of Labor Statistics reported last week. However, the economy concurrently added 280,000 non-farm jobs, which was significantly higher than the 226,000 jobs that job market analysts had been expecting.
Also, the labor force grew by 397,000 people, putting the labor force participation rate (the percent of employable individuals either working or actively looking for work) slightly up at 62.9 percent. Simply put, that expansion in participation forced the rate to increase, but it also reflects a more favorable view of the job market by unemployed individuals, because they are actively looking for work.
“More people working means more income and more potential homeowners,” National Association of Realtors Chief Economist Lawrence Yun noted in a public statement. “More jobs also entail more office leasing and increased rental housing demand. Nothing like jobs to support real estate.”
Initial Jobless Claims
Meanwhile, new claims for unemployment benefits filed by the recently laid-off fell to 276,000, a decline of 8,000 claims from the preceding week’s 284,000 claims, according to last week’s report from the Employment and Training Administration. This marked the 13th straight week that claims stayed below the 300,000-claim mark that typically indicates an improving labor market.
The four-week moving average, considered a more stable measure of lay-offs, notched up slightly to 274,750 claims, an increase of 2,750 from the prior week’s average of 272,000.
So with layoffs down and the job market adding jobs, what will this mean for labor going forward?
“The labor market continues to improve, with low layoffs and strong hiring,” PNC Economist Gus Faucher wrote in a client statement last week. “The tightening labor market will lead to stronger wage growth in 2015 as employers find they need to raise pay to attract workers.”
“The still very low level of jobless claims suggests the uptick in the unemployment rate in May was likely temporary,” UBS’s U.S. Economist Kevin Cummins told Business Insider.
Personal Incomes and Spending
Personal incomes increased by $59.4 billion, or 0.4 percent, while personal consumption expenditures (PCE) decreased $2.6 billion, or less than 0.1 percent, the Bureau of Economic Analysis reported last week. Disposable personal income (DPI; income left after taxes) saw a similar gain, increasing $48.8 billion, or 0.4 percent.
Income growth appeared to be in the right places, too. Wages and salaries increased $17.7 billion in April, compared with an increase of $9.5 billion in March, and private wages and salaries — as opposed to public (i.e., government) wages — increased $15.7 billion in April, compared with an increase of $8.4 billion in March.
Personal savings grew to $744.0 billion in April from March’s $692.5, and the personal saving rate (personal saving as a percentage of DPI) grew to 5.6 percent in April from March’s 5.2 percent.
“The April income and spending figures are another reminder that even though their incomes are rising at a healthy pace, households are still reluctant to boost spending more freely,” BMO Capital Markets Chief U.S. Economist Paul Ashworth wrote in a statement to clients.
Economic News in Review Greenville SC
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