Government data released recently by the Department of Labor paints a picture of a slowly-recovering jobs market, and continued improvement could potentially impact budgeting by increasing labor costs.
A Labor Department report released on November 2 indicated that U.S. employers created 171,000 new positions in October. This figure was substantially higher than the median prediction of a 125,000 gain provided by economists participating in a Bloomberg survey. The experts contributing to this poll gave estimates ranging from 30,000 to 154,000 new jobs.
The unemployment rate rose to 7.9 percent in October from 7.8 percent the month before. This figure matched the median forecast of market experts contributing to a poll run by the media outlet. These economists provided estimates ranging from 7.7 percent to 8 percent.
In addition, the number of jobs created in September was revised up to 148,000. The employment figures were changed to reflect an additional 84,000 new positions over the course of two months, the media outlet reports. The latest revisions mean that the U.S. economy has created an average of 173,000 new roles every month since June. The upswing in job creation over the last several months could be of importance to companies engaged in budgeting for their staff expenses.
"This report is consistent with the emerging picture of an economic recovery that is continuing to regain traction after grinding to a halt earlier this year," Millan Mulraine, an economist at TD Securities in New York, told Reuters.
On top of the report released on November 3, additional data released by the Labor Department the day before outlined a trend of declining jobless claims. A Department of Labor report revealed that the number of people filing initial applications for unemployment benefits dropped by 9,000 during the week ending October 27 to reach 372,000.
"Jobs are expanding despite all this expression of business caution," Maury Harris, chief economist at UBS Securities LLC in New York, told Bloomberg. "You continue to see improvements in people’s perceptions of what’s happening in the job market."
If the sentiment that people have surrounding the job market is indeed getting better, this trend could be of interest to employers engaged in budgeting for their staffing costs. Job seekers with greater confidence in the market might help put upward pressure on labor costs by refusing to take lower salaries out of need or desperation.
One variable that has been identified as being of importance to the broader economy is the policy decisions of the Federal Reserve Bank. Concerned about further deterioration in the economic climate, Fed officials recently announced new plans for stimulus.
They stated that the central bank would spend $40 billion per month on debt until the jobs market had improved significantly. These policymakers also announced that they would keep the benchmark federal funds rate near zero until mid-2015, which is longer than predicted previously.
Bill Gross, who runs bond fund manager Pacific Investment Management Co. and is repeatedly cited by members of the media, predicted that the central bank will probably persist in using these easy money policies to stimulate the economy, according to the media outlet.
"Whether or not the Fed itself will view 7.9 percent unemployment as an all clear signal, I'm sure they won't," Gross said in a radio interview with Bloomberg. "You adapt by assuming they’ll continue to be dovish."
In addition to the Fed stimulus announcements helping to put upward pressure on the sentiment of market participants, both the European Central Bank and the Bank of Japan have announced plans to use monetary policy to help jumpstart the economy.
If the labor market starts improving at a faster pace, what affect would this have on your budgeting?