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Significant Improvement In US Unemployment

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Significant Improvement In US Unemployment

One of the key indicators of the health of the US economy has just been published in the form of the Non Farm Payrolls. This months number has risen again to 288k from Marchs 192k, the important consensus estimate of 210k was easily exceeded on this occasion.

The headline US Unemployment Rate has also been released, this is currently 6.3%, a significant improvement is evident here following last months 6.7% posting. Market economists had been anticipating this month’s rate at 6.6%.

Labor Force participation has also fallen, this months reading is 62.8% which comes in slightly below the 63.2% experienced in March.

There has been much discussion recently around the structural nature of the US employment market. This has largely been driven by concerns expressed by the Federal Reserve Chair, Janet Yellen, that despite improvements in the headline unemployment rate, there is a disproportionate number of part time jobs contained in the figures.

In this respect the Average Weekly Hours statistic has gained a new prominence in market considerations. This months reading has remained static at 34.5%, very much in line with market expectations. The Fed would have been hoping for an upward improvement in this number as a sign of more full time jobs being created.

Finally, to complete the employment picture for the US we have the Average Hourly Earnings numbers for the month. The month on month reading is showing wage growth of 0%, this is down on last month’s 0.1% reading nowhere near the consensus estimate for 0.2% growth. The year on year version of this statistic is now 1.9%, which is an fall on the previous month’s showing of 2.1%

A faster pace of improvement in the employment situation would no doubt be welcomed by the Federal Reserve but today’s relatively benign data is unlikely to give rise to immediate concerns given the overall health of the recovery.

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