The unemployment rate represents the percentage of the total workforce, between the working ages of 15-64, who are unemployed, but who are actively seeking work, in a specified period (monthly or yearly usually). It is calculated by dividing the number of unemployed individuals by those currently working, in a specified period. This is a closely watched measure for governments around the world, because it is a key gauge of how economies are performing.
A very low unemployment rate signals a strong economy and is used as a barometer for wage inflation and capacity utilization. A very high unemployment rate is a sign of a weak economy, including slacking capacity and falling wages.
Finally some good news in the U.S. jobs market?
The Bureau of Labor Statistics (BLS) reported Friday that, in November, 203,000 jobs were added to the U.S. jobs market. As a result, the unemployment rate went down to 7.0% from 7.3% in October. In addition to this, the BLS also revised the job numbers from October and September, saying 20,000 more jobs were created than previously reported. (Source: Bureau of Labor Statistics, December 6, 2013.)
Yes, the jobs market report for November is a step in the right direction. And, while I’m certain the politicians and the mainstream will have a field day with this news, the underlying statistics in the jobs market are not improving.
The underemployment rate, which includes people who have given up looking for work and those who have part-time jobs that want full-time jobs, still sits at 13.2%.
In addition, the number of long-term unemployed, those who are out of work for more than six months, made up 37.3% of all unemployed in November! There are 4.4 million long-term unemployed people in the U.S. and the longer they stay out of work, the harder it will be for them to get back into the market.
Finally, the majority of jobs created in the U.S. economy continue to be created in the low-wage-paying sectors.
The bottom line here is that the “official” unemployment numbers do not reflect what’s really going on in the jobs market. But the official rate is going in the right direction…and moving close to the point (6.5% unemployment) where the Federal Reserve said it would start pulling back on its money … Read More
The International Monetary Fund (IMF) expects the global economy to increase by 2.9% this year and 3.6% in 2014—forecasts which I believe are too optimistic. Why?
First of all, we have the Japanese economy, the third-biggest in the global economy, suffering an economic slowdown. Tertiary industry activity (activity in the service businesses) slowed in September from a month ago. (Source: Japan Ministry of Economy, Trade and Industry, November 12, 2013.)
Then there’s Germany, the fourth-biggest economy in the global economy. Once believed to be immune to the economic slowdown in the eurozone, seasonally adjusted manufacturing output in the country declined 0.8% in September from August. As of September, year-to-date manufacturing output in the German economy has increased only 1.2%—a much slower growth rate than in the same period of 2012. (Source: Destatis, November 8, 2013.)
Earlier this month, in a statement about its monetary policy decision, the central bank of Australia said, “In Australia, the economy has been growing a bit below trend over the past year and the unemployment rate has edged higher. This is likely to persist in the near term… Public spending is forecast to be quite weak.” (Source: “Statement by Glenn Stevens, Governor: Monetary Policy Decision,” Reserve Bank of Australia, November 5, 2013.)
To fight the economic slowdown in the country, the Reserve Bank of Australia is using easy monetary policy measures. The central bank has reduced its benchmark interest rate in the country by more than 40% since the beginning of 2012. The cash rate, the overnight money market interest rate, sits at 2.50% compared to 4.25% in early 2012. (Source: Reserve Bank of Australia … Read More
This morning, we heard from the Bureau of Labor Statistics (BLS) about the jobs market situation in the U.S. economy. It said the unemployment rate in the U.S. was 7.3% in October, compared to 7.2% in September. In October, 204,000 jobs were added to the U.S. economy. (Source: Bureau of Labor Statistics, November 8, 2013.)
Finally, a month in which more than 200,000 jobs were created! But not so fast…
The underemployment rate (which includes people who have given up looking for work and people who have part-time jobs but want full-time jobs) actually jumped in October to 13.8%—it stood at 13.6% in September!
And, as we have become accustomed to, in the jobs market report, we see low-wage-paying jobs accounted for most of the new jobs in the U.S. economy in October: 44,000 jobs were created in the retail trade, 53,000 jobs in the leisure and hospitality sector, and 15,000 jobs in health care. Combined, these low-paying jobs made up 55% of all the jobs created in October!
Jobs which provide a decent salary didn’t see much growth from what we can see in the October jobs market report. Jobs in the traditional high-paying construction, mining/logging, wholesale trade, transportation/warehousing, information, and financial sectors lagged and showed next to no change in growth in October.
The table below, which I have created for my readers, shows the change in manufacturing employment in the U.S. economy since February 2013. So far, until this past September, 2,000 manufacturing jobs were wiped out this year.
Growth in U.S. Manufacturing Jobs,
Feb. to Sept. 2013
All Employees in Manufacturing
Employment Change from Previous
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