Unemployment remains in the United States at 3.6% despite strong job creation | Economy

A sign offering employment at a restaurant in Schaumburg, Illinois.
A sign offering employment at a restaurant in Schaumburg, Illinois.Nam Y. Huh (AP)

In the United States it is more difficult to find workers than to find a job. The unemployment rate remained at 3.6% in April, the same level as in March. That is one tenth above the 3.5% that it had just before unemployment skyrocketed due to the coronavirus pandemic and which, in turn, was the lowest since 1969. The country is close to full employment, despite that frictional unemployment of those who are changing jobs or can’t find one that satisfies them.

The report released by the Department of Labor exceeds the expectations of analysts in job creation, but leaves unemployment one tenth above forecast. In the United States, the labor market is measured mainly with two surveys: one of companies and the other of households. The first is taken as the main reference for the number of job creation and the second is used to measure the active population and the unemployment rate. They are usually in tune, but on this occasion, they have sent somewhat contradictory signals. This explains why, with high job creation, unemployment has not fallen. In fact, in the household survey, the employment figure has decreased.

All in all, the report shows a very dynamic labor market, which has been creating jobs for 12 consecutive months. In April, 428,000 jobs were won, a rate somewhat lower than what had been seen. In the last six months an average of 600,000 jobs per month had been generated. That slowdown, although it has been less than expected, is actually a good sign, it would facilitate the soft landing of the economy that the Federal Reserve is looking for. The US central bank has stepped up the pace of interest rate hikes and plans to set them at 2% in July to contain inflation, at a four-decade high.

The effects of these rate hikes have already been noted in advance, with a strengthening of the dollar and a rise in interest rates in the markets that has anticipated the official increase in the cost of federal funds. And if those financial restrictions succeed in cooling the labor market, it will be easier for the Fed to contain inflation and the risk that it will have to be more aggressive and that will cause a recession will be reduced.

back to market

Experts also believe that as health concerns about the pandemic subside, it is more likely that employees who left it will rejoin the labor market, in the so-called big resignation. A phenomenon like that is easier when finding a job again is not a problem. But analysts expect the price hikes to add to the pressure for additional income and give the labor market some breathing room on the supply side.

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In April, however, that has not happened, participation in the labor market or active population has been reduced.

Today it is easy to find posters in commercial and service establishments with job offers. The restoration is a sector that is encountering many problems to contract, for example. This, in addition, causes salary increases and feeds the price-salary spiral that feeds back into inflation.

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