As predicted by analysts, first time jobless applications declined in the week ending March 13 to 457,000 according to the Labor Department. The decline continues the trend that was established two weeks ago, with the job markets picking up and signs of new hiring emerging in several industries. However, a large number of people are still receiving unemployment benefits, which is a cause for concern.
The four week moving average of claims showed a decline from 471,250 to 475,500 over the past week. Although the improvement is slow, economists are hopeful that the job market is finally turning around and more good news could follow.
The Fed forecast about stable inflation rates came true in February, which meant that the cost of living remained largely unchanged. The consumer price index increased by a negligible 0.1% as most economists had expected.
Although the key economic markers are stabilizing, there are some worries that businesses are still hesitant to augment staff and are not as aggressive as people were hoping. But fewer layoffs are taking place now, as the effects of the recession finally begin to fade away and companies gain more confidence in their ability to survive.
At the end of February, about 352,800 more unemployed workers collected extended benefits. However, in the week ended March 6, the unemployment rate among those eligible for benefits remained steady at 3.5%.
Government sources say that many workers who are discouraged with existing work terms may soon start looking for new jobs now as optimism has improved. This will lead to a slight increase in unemployment rates in the near future. They predict that in spite of the improving conditions, not many new jobs will be forthcoming, leaving the jobless rate above 9.7%.
For steady and sustainable economic growth, increase in the number of people on payrolls is essential. This will put more purchasing power in the hands of the people, which in turn will boost the economy. There is fear that, in the absence of improvement in employment rate, the economic recovery could soon fizzle out.
The Fed has also made it clear that it is not going to increase rates as long as the unemployment situation is not brought under control. Leading economists like Paul Krugman have urged for fresh economic stimulus packages to ensure that the recovery is sustainable and more jobs can be created.
Speak Your Mind