Weaker dollar and higher productivity have increased attractiveness of US manufacturing
After six months of strength, American employment numbers in recent months have been poor. This increases the odds the Federal Reserve will try and stimulate the economy – an action that may happen fairly soon.
In the meantime, there’s some interesting data out there, specifically the numbers by industry. They are telling a story of an economy in slow transition.
Between May of 2011 and May of 2012, the United States economy added about 1.8 million jobs, bringing the U.S. unemployment rate down to 8.2 per cent from 9 per cent. The most recent employment reports have been strong enough to accommodate a growing population, but not strong enough to bring down the unemployment rate.
Sectors dependent on discretionary household spending, with the exception of fast food joints, added very little to employment growth. Meanwhile, government-related hiring has been in full contraction. In fact, if governments had just maintained employment levels it would have lowered unemployment 0.1 per cent last year.
On the bright side, changing economics, such as a weaker currency and higher productivity, has increased the relative attractiveness of American manufacturing. Hiring was also strong in professional and business services. This group includes lawyers, accountants, engineers and computer scientists – employment groups that tend to be in demand for a variety of reasons.
Unsurprisingly, industries that were at the epicentre of the economic turmoil, construction and finance, remain flat, but at least they aren’t shedding employees anymore, which is positive.
It likely isn’t surprising that employment in health services and education continued to climb, as people get sick and kids need to be educated regardless of the state of the economy.
The U.S. economy is turning around, but it’s likely occurring at a far slower pace than many would like to see.
| ATB Financial