Unemployment rate falls
In the United States, the unemployment rate measures the number of people actively looking for jobs as a percentage of the labor force. Expansion in business operations is usually accompanied by employing more people. Strong employment rates signal strong economic growth prospects. The U.S. Bureau of Labor Statistics reports the US unemployment rate.
In January 2015, the US economy added 257,000 new jobs. In December 2014, it added 252,000 jobs. The Federal Reserve noted that a range of labor market indicators suggests that the underutilization of labor resources is gradually diminishing.
The unemployment rate in the United States increased slightly in January to 5.7% compared to 5.6% in December. Economists expected net job growth of 234,000 last month.
Gad Levanon, managing director, Economic Outlook & Labor Markets at the Conference Board, said in a research note, “Given the strong employment growth, the uptick in the unemployment rate is mostly noise in the data, which will be followed by rapid declines in the months ahead.”
Paul Ashworth, chief U.S. economist at Capital Economics, said, “The strength of employment growth suggests the Fed should drop its ‘patience’ language in March and start raising its policy rate by mid-year.”
Improvement in employment drives the demand for leisure activities. An increase in wages could drive consumer disposable income.
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Alongside these positive indicators, however, are interest rates. A steady improvement in the labor market makes it more likely that the Federal Reserve will raise short-term interest rates.
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