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Not spluttering any more
Oct 3rd 2014, 18:04 by D.K
AMERICA S economy is finally beginning to feel like it is picking up pace.
According to figures published today by the Bureau of Labour Statistics, total
employment in America increased by 248,000 in September, driven by big jumps in
professional services, retail and healthcare. The unemployment rate dropped
below 6% for the first time since 2008. Jobs growth figures for August and July
were also revised up by 69,000, suggesting the economy was not as weak in those
months as previously thought.
The figures will reassure economists who had been wondering whether the economy
was really bouncing back. Deutsche Bank have already raised their forecast of
annualised GDP growth in the third quarter from 3.7% to 4.2%. Yet there were
also less positive signs. The labour force participation rate fell slightly,
and is now as low as it has ever been at any time since 1978. That suggests
that population growth is barely keeping pace with retiring baby boomers and
growth is not yet drawing in large numbers of people who dropped out of work
during the recession. Even more depressingly for workers and for the Democrats,
who would like an economic bounce to help their mid-term election chances wages
remain stagnant too.
Some workers are at least getting longer hours. In manufacturing, the average
workweek lengthened slightly, and is now as high as it has been in 60 years.
Helped along by cheap shale gas, America's manufacturing decline seems to have
been arrested and indeed partly reversed. Rising demand for labour should begin
increasing wages soon, as unemployment reaches a level where employers have to
start paying more to find workers (though probably not in time for next month s
election).
Since the report was published, the dollar has surged to a 4-year high as
investors have interpreted the data to mean that the Federal Reserve will soon
begin to tighten monetary policy. Stock markets have also jumped sharply. The
contrast with the eurozone, where PMI survey data published today suggested an
even deeper slowdown, could not be sharper. That will not be lost on Mario
Draghi, the president of the European Central Bank, who long after European
economies started spluttering again, is still struggling to make the case for
more monetary stimulus.