Unemployment Rate Declines to 5.5%, but the numbers not as encouraging as they might Sound

Unemployment Rate Declines to 5.5%, but the numbers not as encouraging as they m

Current unemployment rate in the US is 5.5% and is low enough to be considered as an indication of a healthy job market. The percentage is considered to be a seven-year low.

Though the multi-year low unemployment should be rejoiced, as per experts it’s not as encouraging as it might sound. In February, US employers employed 295,000 people. Economists suggest that the percentage decreased majorly because people stopped searching for job.

Therefore, they were no more officially counted as unemployed. It shall however, be noted that wage gains remained sluggish. This is the reasons that job market seems to be improving, but it is not as it seems to be sounding.

This factor has made things a bit tricky for the Federal Reserve, whose current task is to identify when the economy has strengthened to such a level, where it would be able to manage high interest rate. It is said that authorities concerned are thinking to increase the rate by as early as June.

Experts affirmed that America is moving ahead of other economies. To cite an example, the unemployment rate in 19 countries sharing euro is 19.2%.

Healthy US job gains have convinced many investors that the Fed will soon increase the short-term interest rate. On Friday, investors sold US Treasuries, which is an indication that many are expecting a rate increase.

The current unemployment level is consistent to economists’ term ‘full employment’. It is the situation, where the unemployment level has decreased to such an extent that the employers must pay higher wages to find qualified employees.

Companies raise wages and then the Fed increases its benchmark short-term rate to ward off inflation and to strengthen growth.