Jobless rate steady


The U.S. economy probably recorded a second month of solid job gains in November, which would bolster views the labor market is improving even though the activity is not enough yet to lower the unemployment rate. The unemployment rate is forecast to have held steady at 9.6 percent. Economists said there was a chance payrolls could surprise on the upside, citing a resurgence in retail hiring after a two-year slump.

 

In October, U.S. employment increased by 153,000. A second month of strong employment gains coming on the heels of reports indicating a pick-up in demand could shore up perceptions the economy’s recovery from the worst recession since the 1930s is becoming self-sustaining. That shift began to shape up in the third quarter as consumer spending’s contribution to growth eclipsed the rebuilding of inventories. Consumer spending typically accounts for about two-thirds of U.S. economic activity. But unemployment is seen remaining stuck at 9.6 percent for a fourth straight month in November because, with conditions in the jobs market improving, some discouraged workers probably rejoined the labor force. Employment has increased by about 874,000 since December 2009, a tiny fraction of the over 8 million jobs lost during the recession. Analysts believe that gap would compel the Federal Reserve to fully implement its controversial $600 billion program to buy government bonds. The purchases are designed to push already low interest rates down further to stimulate demand. Concerns about joblessness and low inflation led to the U.S. central bank’s decision last month to launch its now much-criticized second round of quantitative easing, as QE2 is known in financial markets. Fed officials are not the only ones worried about unemployment. The health of the labor market could determine whether President Barack Obama gets a second term in office in 2012.

 

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