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Why You Shouldn’t Expect An Increase In Job Growth

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Why You Shouldn't Expect An Increase In Job Growth

Job data from May, 2016 reflected a continuing slowdown in job growth. 

How should this new information be construed?

According to the report, there are only approximately 38,000 new jobs are available for May 2016. 

This figure was predicted by the trends of the preceding months.  

More so, this decreasing movement and activity in the job sector has alerted the Federal Reserve to proceed with caution.

But are these deflated figures a true reflection of the economic state of the country? 

The slow economic recovery seems undaunted at this stage. 

Perhaps the lessened job growth is not indicative of the potential slowing down of the economy as a whole.

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The job growth sector is not necessarily linked to the capabilities of the economic production of the country.

Some questions that can be posed in analyzing the figures are:

  • Is the slowing of job growth a deviation from what is normal under the current conditions in the economy?
  • Is the job market saturated?  And if so – is this necessarily a reflection on a predicted economic fall?
  •  Will payroll gains diminish?  There have been unchanging salary increases around the 200,000 mark since the economy recovered.  Is this about to change?

The forecasters at the Federal Reserve Bank may have to accustom themselves to this continued pattern of job growth. 

It may take a longer time to reflect the true economic situation. 

Investors can also follow suit.

As can be seen in the graph below, the fairly unimpressive up and down fluctuations of the job growth sector have taken a marked turndown:

p5.3

Looking at the graph below, one can see the jobs in the US that are showing an active profile in the job growth sector and those showing little activity and decline in numbers.

p5.4

Economists report, in polls that were taken before the June job growth reports were in, that the month is expected to show the same predicted figures as the last half of this year (2016). 

That is an average of 170,000. 

These figures are still considerably down from the ones accounted the previous year (2015) at 229,000.

It can be seen that there is a traditional pattern emerging here again today looking back in time. 

The current expansion that has been ongoing for seven years is one of the longest since the Second World War.

What is apparent in looking at the graphs below – that they show the steady rise of unemployment linked to an economic rise or fall.  

Reading the data on the first graph below, it shows that the unemployment is steadily climbing in the lead up to 2016 and in the past, that happens before an adjustment in the economy.

p5.5

The graph below shows how the upward swing in employment in the years displayed, is linked to similar buoyancy in the economy and vice versa:

p5.6

Records show that:

  • Job growth slowed in the final months of each economic expansion.
  • The middle of a recovery reflected job growth.

We are currently experiencing employment growth that is approximately half that which was shown in the months preceding for last year (2015).

It can be seen that these correlating dips occurred in the nineties and the eighties as well, looking back at the last few decades. 

The evidence collected from those two mercurial decades point out that the slowdowns in job growth lead to economy adjustments occurring after a period of rising and stability.

These are useful figures to observe after the fact. 

Even if we are at the end of game time in this particular period of economic growth and expansion, it does not mean that it will happen anytime soon.

Weak payrolls growth is not going to have an immediate impact. 

All signs are that the reports will continue to be optimistic. 

As long as the labor force remains steady, it is still a long way from reflected recessionary trends.

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