Daily Management Review

Despite The Banking Crisis, Employment Creation In The United States Remains Healthy


Despite The Banking Crisis, Employment Creation In The United States Remains Healthy
Despite the turbulence in the banking industry and the impact of increasing borrowing prices, job creation in the United States remained healthy last month. Employers added 253,000 jobs, exceeding many analysts' expectations.
The unemployment rate dropped to 3.4%, a multi-decade low. The improvements served as a reminder of the US labour market's resilience in the face of vigorous measures by the US central bank to chill the economy.
In little more than a year, the Federal Reserve boosted its benchmark interest rate from near zero to between 5% and 5.25%, a dramatic adjustment aimed at slowing price increases that were the fastest in decades last year.
These hikes have significantly increased the cost of purchasing a home or car, as well as making borrowing to expand a business or incur other debt more expensive. In principle, this should slow the economy and relieve the pressures that are pushing up prices.
However, while job growth has slowed since last year, it continues to outperform analysts' estimates of what is required to keep up with population growth.
The Labour Department said on Friday that hiring was lower than originally projected in February and March. However, job creation resumed last month, with wages rising 4.4% year on year.
"Today's report clearly suggests weakening labour markets - most obviously in the downward revisions of prior months data - but from a very strong starting point," said Ronald Temple, chief market strategist at Lazard.
Many experts believe the US economy will enter a recession later this year, citing significant slowdowns in crucial areas such as housing. Big companies such as Facebook-owner Meta, Amazon, entertainment behemoth Disney, banks, and others have announced job cuts in recent weeks.
The rate hikes further exacerbated the upheaval in the banking sector, which has been shaken by the most significant spate of failures since the 2008 financial crisis. However, the president of the US central bank, Jerome Powell, said this week that the continued strength of the labour market gave him faith that this time would be "different" - and the US may escape a slump that would put millions out of work.
"That would be against history," he acknowledged. "I fully appreciate that."
Brian Zovko, a software engineer, was laid off from his work in the automotive business in February. He expressed amazement because his company had been profitable. However, bosses have recently raised the likelihood of cost cuts, citing concerns about the impact of increasing borrowing prices and an economic slowdown.
The 27-year-old from Texas claims he has been depending on savings and spending prudently. He stated that he felt the market had cooled in recent months, but he remained optimistic that he would find a new position soon.
"I'm mildly optimistic that I should be able to get back on track," he said. However, he added, "it seems like there's a decent risk the economy gets worse".