The number of jobs created – or
lost – by an economy is very important to investors and analysts. This is
because an economy that adds more jobs than it loses is often viewed as being
better. When more people are employed, they are able to support themselves and
not to rely on the government. In addition, the government is able to get more
revenue to invest in public projects like roads, schools, and other
infrastructure. When the economy has a low rate of unemployment, the central
bank has a room to adjust the interest rates.
Today, the Bureau of Labor
Statistics (BLS) is expected to release the employment numbers for the month of
March. These numbers will be watched closely because of how disappointing the
numbers were last month. In February, the economy added just 20K jobs, which
was much lower than the expected 170K. This was the lowest reading since
October 2017, when the economy added 18K jobs. Today, investors expect the
economy to have added 175K jobs in March. This will bring a relieve to the
market. On Wednesday, ADP released numbers that showed that the economy added
120K jobs in the month. However, the ADP number often differs from the official
government data. Yesterday, the initial jobless claims data released declined
by 10K, to 202K. This was the lowest level since 1969.
The participation rate is an
important number, which shows the number of people who are in the job market
and those who are actively looking for work. A higher rate is usually a good
thing for the economy. In the past few months, the participation rate has been
increasing as the labor market has been tightening. Today, investors expect the
rate to increase slightly to 63.3%. The table below shows the recent trends in
the participation rate.
The unemployment rate is an important
measure of the percentage of the total workforce that is unemployed and one
that is actively seeking for work. A lower rate is usually a good thing for the
economy. In the past months, the economy has been in full employment, which is
usually when the rate is below 4.5%. Today, investors expect the rate to remain
at 3.8%. The U6 unemployment rate is similar to the normal unemployment rate
with the only difference being that it factors also people who are doing part
time work for purely economic reasons. This is expected to remain at 7.3%. The
table below shows the recent trends in the unemployment rate.
An economy that creates a lot of
jobs is not enough. Investors watch closely whether the wages of the workers is
increasing or stagnating. For this reason, traders watch out for the wage
growth numbers. In the past few months, wages have continued to grow, rising
from 2.7% in May last year to 3.4% in the past month. This growth was
attributed to the Trump tax cuts. Today, the numbers are expected to show that
the wage growth hit 3.4% in the month. The chart below shows the wage growth
since May last year.
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