April 16, 2021

Economy Is Showing New Signs of Strength

On Thursday, reports showed that services companies were increasing hiring and that fewer people were applying for unemployment benefits. That data followed reports of stronger auto sales and faster expansion by American factories. A report is due Friday on job growth in August. This year’s job growth, with a sharp drop in layoffs, has helped lower the unemployment rate to 7.4 percent in July from 7.9 percent in January. In anticipation of the report on Friday, analysts were predicting that employers added 180,000 jobs in August, with the jobless rate staying stable at 7.4 percent.

The improved jobs market is a major reason many economists expect the Fed to begin scaling back purchases of Treasury and mortgage-backed securities this month. The $85 billion in monthly bond buying has helped keep interest rates low to encourage consumers and businesses to borrow and spend more.

At its policy meeting on Sept. 17 and 18, the Fed will consider whether to taper its bond purchases and, if so, by how much.

Several reports released on Thursday and earlier this week have backed Fed officials who say the economy is healthy enough to stand the tapering.

Services businesses, which employ about 90 percent of the American work force, expanded last month at their fastest pace in nearly eight years, the Institute for Supply Management reported. Sales and new orders rose. Services companies hired at their fastest pace in six months. The institute’s index of service sector growth has jumped 5.8 points in the last two months, to 58.6 — the biggest two-month increase since it began in 1997.

The four-week average of first-time applications for unemployment benefits fell in the last month to its lowest point since October 2007, two months before the recession. In the latest reporting week, initial jobless claims dropped 9,000, to a seasonally adjusted 323,000.

The payroll provider ADP reported that American businesses added 176,000 jobs in August. Factory activity last month reached its strongest pace in more than two years. Americans bought new cars and trucks in August at the fastest annual pace since November 2007, with sales jumping 17 percent from a year earlier.

Article source: http://www.nytimes.com/2013/09/06/business/economy/economy-is-showing-new-signs-of-strength.html?partner=rss&emc=rss