Labor market situation in the U.S. again unfavorable. This signals that the Fed / Fed / are likely to continue to delay the termination of their controversial super soft monetary policy.After a good growth rate demonstrated in February and March, in April, the restoration of the labor market was faced with difficulties. The last of this signaled a report published on Thursday, according to which in the last week of April a sudden increase in the number of Americans who completed an application for unemployment benefits.
Another, more accurate report would be submitted to the Ministry of Labor on Friday. Economists predict that this report will reflect the fact that employers last month continued to hire workers. But these data may be the last favorable data for some time.
"Recent data show that we have some time do not see favorable data on the number of jobs. It can strengthen our expectation the Fed will start tightening their monetary policy, said Michael Ferol, an economist at JP Morgan Chase.
Last week the Fed announced that it plans to widely extend credit to support economic development and job creation. This policy has been criticized for what it contributes to inflation. Fed Chairman Ben Bernanke spoke out in defense of this policy, saying that in his view, the rise in prices for oil and other commodity prices is temporary. He declined to comment when the interest rates that are now virtually at zero, may be increased, saying that the Fed is "very closely" monitoring the state of the labor market, in order to determine the future course of its monetary policy.
The unemployment rate fell in March to 8,8% from 9,8% in November. But the slowdown in the 1 st quarter, combined with higher prices on production costs caused by soaring oil prices is not expected to cause many companies are less willing to increase growth in the number of new employees in the coming months.
The poll, completed on Monday, economists predict that Friday's unemployment report would show that the U.S. economy in the past month has been created 185,000 jobs, which is lower than in February and March, when the number of jobs, on average, grew at 200 000. This growth may be insufficient to reduce unemployment, and some investors now fear that the April report, data will be disappointing.
During this week's dismal economic data followed each other. Last appeared on Thursday: The primary applications for unemployment benefits in the week 24-30 April, taking into account the correction for seasonal variations rose by 43,000 to 474,000. Such data are presented on Thursday, U.S. Department of Labor. This increase was the biggest surprise and led to the fact that the number of initial claims for unemployment benefits rose to its highest level since August 2010.
Despite the fact that the weekly data on applications can be volatile, data kept above 400,000 last four weeks. Most economists believe that the economy there are more jobs than it disappears when weekly applications for unemployment benefits are less than 400 000.
Analyst at the Ministry of Labor associates recent increases in applications with single administrative factors, including additional layoffs in New York due to the spring recess, which doubled the number of requests in that state. Other causes to which he referred, was a new program of emergency grants in Oregon, as well as additional applications in the automotive industry, due to the need to close factories due to lack of parts. However, some analysts are skeptical of this point of view.
"Despite the fact that they try to explain increase in applications by special factors, they tried to find justification for each of the three most recent statements and their credibility diminishes" - believes Steven Rishiuto, an economist at Mizuho Securities in New York.
Immediately after the data release, upon request, In the futures market, it was noted decline rates that the Fed will raise its key interest rate in the spring of 2012. However, when the government invoked special circumstances, the Fed futures regained some lost ground.
Other indicators also recently highlighted the weaknesses in the economy and the number of jobs in April. Sustainable agricultural sector grew at a slower pace as its employment index. In the service sector experienced a sharp decline in activity and a similar slowdown in job growth. And the weakest job growth in the sector this year recorded a record of the number of jobs in the private sector, released on Wednesday.
The number of jobs in the private sector in April rose by 179,000. Such data are contained in the report Automatic Data Processing Inc. / ADP / and Macroeconomic Advisers. In March the figure was 207,000.
Friday should leave the data on non-farm employment, which includes data on employment in the public sector. On the background of the fact that state governments and districts continue to reduce the number of workers in order to reduce the budget deficit, this is another reason that allows to expect that labor market weakness persist. If inflation turns out to be a temporary phenomenon, believed the Fed, it might be a good reason to maintain the current monetary policy.
