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US labour market gains propelled by robust consumer spending

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March 28
10:36 AM 2016

The global market is facing many challenges in the manufacturing and retail sectors. Many companies have pulled back their investment plans, citing poor profit. In addition, the overall global economy is again expected to register gloomy growth figures in the first quarter of 2016.

But still, there is no need to fear as long as the US continue adding more than 200K jobs per month, weakening the risk of recession, according to market experts. Analysts polled by MarketWatch said that the country possibly hired 210K workforces in March. On an average, the country hired 213,000 fresh jobs per month in the past four years.

Meanwhile, the country's unemployment rate in March is anticipated to remain at 4.9%, which is an eight-year low. The official monthly report on employment is scheduled to be released on Friday. The increase in job recruitment has created a foundation for slow but steady US economic growth amid the struggling global economies.

The US companies are motivated by the rising consumer spending to recruit more workforces in order to meet the growing demand, despite poor profits among corporate giants. PNC Financial Services' deputy chief economist Gus Faucher said, "Consumer spending is big positive thanks to job and income gains and low energy prices."

In 2015, adjusted profits, excluding tax amounts, declined 3.2%, marking the first fall since 2008, a period when the country was suffering from the horrible economic downturn since the Great Depression. However, investment in 2015 increased merely 2.8% following an increase of 6.2% in 2014. Among the key industries in the US, energy firms have been stricken by the fall in oil prices, while manufacturer sectors have been hurt by poor exports.

Some financial experts believe that profits decline is associated with the decelerating fortunes of the energy sector. According to a recent consumer credit report, in January, the total consumer spending reached an all-time height of $3.54 trillion, an increase of 6.5% in the previous year.

Analysts say that a pleasant occupation figures may support the strengthening of the dollar and provide some downside relief to the Reserve Bank of Australia. The Sydney Morning Herald cited a currency analyst at Credit Agricole Valentin Marinov, who said that the employment data, which is scheduled to be released on Friday, will back up the robust US dollar and Fed interest rate expectations.

According to FINANCIAL POST, the economic growth in the US slowed during the fourth quarter, but better than it was anticipated previously. The country's GDP rose at an annual rate of 1.4%, beating its previous estimate of 0.7%. The nation's economy increased at a rate of 2.0% during the third quarter and widened 2.4% throughout the year 2015.

The US economy is trying to recover amid the sluggish global market. The nation's economic growth is likely to be favoured by fairly robust consumer spending and good employment data.

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