In a recent report by the US Department of Labor, employers added another 204,000 jobs in October even after the sixteen day government shutdown. This suggested the US economy may be stronger than many had assumed.
Employers also reported that more hirings were conducted in both August and September than what was initially projected. Aside from that, there was greater activity in service oriented companies as well as factories last month.
Unemployment had increased from 7.2% to 7.3% in September. The increase may be attributed to the furloughed federal workers were counted as unemployed albeit temporarily.
According to Deutsche Bank AG Chief US economist Joe LaVorgna, "It's amazing how resiient the economy has been in the face of numerous shocks." According to analysts, the economy might be able to sustain its improvement. This comes from the recent gains in terms of employment in the recent months as well as modest increases in the pay of those currently employed. This together with the growing demand for homes would help in the recovery of the real estate construction market.
Another area showing positive outlook would be the automotive industry, as more and more Americans are purchasing cars after it had put off purchases because of the recession that occurred six years ago. Alongside this is the nationwide average for gasoline pegged at USD3.21 per gallon, which is the lowest level since December 2011.
The growth in the job market was one of the major factors that the Federal Reserve identified in its decision to reduce its economic stimulus. Called tapering, the Federal Reserve had been purchasing bonds to keep long term interest rates at a low level as well as encourage borrowing and spending.
The Dow Jones industrial average increased by 167 points or about 1.1% to close at a record high last Friday, after the jobs report was released. The yield though on the 10 year Treasury note increased from 2.60% to 2.70% late Thursday. This is an indicator of investor fears that the Federal Reserve would be pulling back its bond-buying activities.
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