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APRIL JOBS REPORTS WILL REVEAL THE TRUTH

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APRIL JOBS REPORTS WILL REVEAL THE TRUTH

May 4 2015, 06.45am GMT

STOCK.com

When one bad US jobs report is released, it causes investor concern. When two poor reports are released one after each other, there is reason to panic.

Interestingly, virtually nobody at the White House or on Wall Street is panicking for now. Predictions released by forecasters say that in April, job creation will bounce back in a significant way after a disappointing 126,000 increase was recorded in March which also marked the smallest increase in fifteen months.

MarketWatch analysts predict a very positive 245,000 job gain in April. These numbers will see the hiring levels restored close to the average recorded in 2014 which saw the US add the greatest number of jobs since the year 1999.

Added to this, in April, the unemployment rate saw a decline to 5.4 percent which marks the lowest percentage since 2008 May.

The April employment report is what really matters on this week’s economic calendar especially after an extremely small 0.2 percent increase in 1st quarter growth as well as small job gains recorded in March.

The larger bet seen on Wall Street is the economic slowdown that occurred earlier this year showing an abnormally tough winter and additional temporary impairments that will soon disappear.

To help confirm that view would be a comeback in hiring numbers. The previous Chairman of the Federal Reserve, Ben Bernanke, asserts in his new blog that the pace of gains in employment give a better feel of how performance in the economy is going rather than reports released quarterly reflecting the countries growth. In other words, forget about the 1st quarter and focus forward.

However, all bets will be reduced to naught if the employment faucet in April is decreased to a trickling pace for a 2nd consecutive month. In this case, it would then signal a wider softness in US economic growth.

These early stage signals are not very hopeful. Consumer confidence dropped in April to their lowest 4 month levels, for starters. In addition, a survey conducted on executives in the US manufacturing sector indicates that hiring came to a grinding halt last month to better manage the slowdown in sales. A chief economist at Bank of the West, Scott Anderson said, that the 1st quarter for the US economy was extremely weak and the second quarter seems to be heading the same direction.

Some other economists are less concerned. Expectations are that the warmer summer weather will get consumers out of their lethargic mode and lure them into spending more money after being enclosed in their homes during the final icy winter months.

What’s more is that the hiring burst seen last year has obligated companies to compete for a declining pool of employees to offer better salaries, resulting in the fastest increase rate in wages and benefits during the first quarter since the close of 2008. Bigger pay checks, coupled with cheaper gas prices, are ultimately putting loads more money into many people’s pockets.

In a speech on Friday, Loretta Mester, the President of the Cleveland Federal Reserve said that household debt burden levels have normalized to ensure they have better financial cushion. This should further assist in supporting the economy in 2015.

Little evidence has been shown thus far that the average consumer is willing or ready to go and spend money. Instead, consumers are saving more money now compared to a year-ago. This is not the best news for consumer based economies where spending from households is the primary driver of growth.

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