April jobs Report Thrills Investors, Leaves Economists Cold

Although this Friday’s federal report on U.S. unemployment was reassuring enough to boost investors confidence and buy more stocks, some economists remain skeptic about the long-term evolution of the jobs market.

Some say that the picture depicted by the April jobs report points at a lukewarm economy, rather than a “steamy” one. Others are concerned that there may be other reasons behind sluggish growth of new jobs nationwide aside harsh winter temperatures. After all, some claim, 223,000 new jobs in not that great. It is good, but not “great”.

Still, the Dow Jones index’ uptick by 267 points this Friday shows that investor community is confident that U.S. economy regained its momentum. Investors also overlooked the Federal Reserve reluctance to hike its benchmark interest rate out of concerns that it may destabilize economy, or Janet Yellen’s criticism that they were too eager to pump money into a excessively pricey stock market.

But the figures for April unemployment rate compared with March’s disappointing results convinced investors more than any words could. The average rate for March was not greater than 154,000 new jobs, while the minimum was 85,000.

Nevertheless, analysts expected a great rebound for last month, which, they say, never happened. The only industries were job growth was noteworthy was home building market which added 45,000 new jobs, food industry with its 26,000, health care with more than 45,000, and business services sector with more than 60,000.

But the uptick in construction labor market reassured some economists that they were right when they said that the U.S. economy was slowed down by winter weather, rather than by deeper structural issues. These economists believe that the low economic performance recorded early this year is mainly due to people less willing to go out shopping or looking for a new home under severe winter conditions.

However, skeptics claim that the recent jobs report is accurately describing a “Goldilocks” economy designed to gain investors’ trust and keep them investing, while everything else creaks.

Moreover, such report matches perfectly investors’ interests although it may look disappointing to job-seekers. Investors do not want an out-of-this-world job growth because the Federal Reserve may have the reason to raise interest rates, which had stalled near to zero in the last few years. High interest rates could freeze the stock market. For the same reason, investors were also pleased by the slow pace of wage growth.

But more pessimistic economists called the report “modestly disappointing” and argued that although the uptick in construction jobs is good news for economy, manufacturing industry failed to keep the pace as it only saw 1,000 new jobs.

Those economists also think that the current figures may signal some deep-rooted problems since jobs in hospitality sector didn’t rebound as it was expected after the harsh winter was over.

Since the unemployment rate for April is 5.4 percent, more Americans can get a full time job, but a large number also expects better job opportunities. According to the report, nearly 11 percent of people are working part-time or temporarily although they aim at a full-time position. Although eleven percent is better than the Recession’s 17 percent, the figure is still worrisome.

Image Source: Under30CEO