Sometimes life's small victories can seem bigger when they follow a losing streak. The way the economy has performed lately might seem like a win compared to the depths of the Great Recession.
This week, the U.S. Department of Labor releases its report on how the job market performed during March. As always, Friday's employment report will be mined for evidence of any change in the trend of fairly encouraging economic data.
Recent key signs of economic growth have included the improving housing market, low interest rates -- courtesy of the Federal Reserve -- and the continued rally in the stock market.
Last month, the government said the nation's unemployment rate slipped in February to 7.7 percent. Joblessness has been declining but is still a considerable distance from the goal of 6.5 percent that Fed Chairman Ben Bernanke has laid out as the threshold that would allow the central bank to begin lifting interest rates from their current record lows.
As a reminder, the monthly jobs report is essentially split into two surveys: Businesses are asked directly about the size of their workforces, to produce the payrolls number; a household survey reaches out to individuals, and from that, the unemployment rate is computed. It isn't all that unusual to get reports in which the household survey appears to be at odds with the payrolls portion, but they typically do tell similar stories over time.
To reflect on where we are, the government says an average of 191,000 jobs have been added to payrolls over the previous three months. The four-week moving average of new claims for unemployment benefits is close to a five-year low. All of that suggests job cuts are waning. As for the upcoming report, economists expect it to largely portray steady hiring, similar to what's been seen over the past few months.
Consumers' growing concern
There are some potential dark clouds for the economy. Consumer confidence, reported by The Conference Board, took a hit in March. The business research group chalked up the drop to the $85 billion in mandatory federal budget cuts that began taking effect early in the month. In its statement, The Conference Board said, "The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident."
Left unanswered is whether consumers are still spending, regardless of how they feel about things. Given how they turned into Debbie Downers in March, will there be more trouble ahead?
The sequester is taking a toll on business sentiment, too. At ManpowerGroup, the Milwaukee-based human resource consulting firm, chairman and CEO Jeff Joerres says it's just one more risk factor giving employers pause. Says Joerres: "It is clearly making a difference." He says firms have remained risk-averse after the financial crisis, adding, "It is all of these forces that keep coming at companies. That keeps them more in the hesitant mode."
More of the same?
As for employment, Joerres doesn't expect a big pickup in hiring in the coming months. Remember that winning streak we referenced earlier? Reflecting on the monthly hiring gains reported by the government, Joerres says this has become the new normal. "Folks have felt like anything over 150,000 is good." But he says monthly payrolls will need to boom into the 300,000-per-month range to bring discouraged workers back into the job hunt.
With spring comes college graduation for the class of 2013. Students are hoping for good jobs, and there does appear to be reason for optimism. In a statement, CEO John Challenger with the outplacement firm Challenger, Gray & Christmas notes that as the year began, "there were 47 metropolitan areas with unemployment rates under 6 percent." He says a nearly equal number of cities had jobless rates of between 6 percent and 7 percent. Those numbers suggest to him that graduates may not have to move far to find jobs.
In high gear
On Tuesday, automobile manufacturers report their monthly sales figures. Auto information provider Edmunds.com predicts the level of U.S. sales for March will be the highest since May 2007. If consumers are plunking down enough money for a car or truck, that would seem to run counter to the notion that they're losing confidence.
Is that all you've got?
While the jobs report is by far the most important one, there are some other key readings due this week. These include the two monthly snapshots on business activity from the Institute for Supply Management. The manufacturing report is due today at 10 a.m. Eastern time. A follow-up, covering the nonmanufacturing sector, is due Wednesday morning.
On Friday afternoon, the Federal Reserve issues its report on the use of consumer credit during February.
This week in business history: 2 Microsoft anniversaries
Thirty-eight years ago, most people might have said they'd have no use for a computer, but some enterprising visionaries proved them wrong. On April 4, 1975, Bill Gates and Paul Allen founded Microsoft. Gates has since given up day-to-day control of the software giant to focus on the Bill & Melinda Gates Foundation.
Another anniversary this week also involves Microsoft. On April 3, 2000, federal Judge Thomas Penfield Jackson ruled that Microsoft violated antitrust law, and he sought to have the company broken up. The ruling would later be overturned, and the U.S. Justice Department would eventually stop seeking a breakup. In time, the federal government's case was settled. Microsoft remains one of the top 10 companies based on total value of its stock, or market capitalization.
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