The Daily Item, Sunbury, PA

News

June 7, 2013

National unemployment rate back up to 7.6 percent

(Continued)



Stock markets have gyrated in the past two weeks on speculation that the Fed would soon start to taper its $85 billion-a-month in bond buying — a step that could raise rates and cause stock prices to fall.

“I think the Fed will stay on hold,” said Nariman Behravesh, chief economist at IHS Global Insight. “They want to see numbers above 200,000 on payroll jobs on a consistent basis before they start to taper off.”

Behravesh said he thinks the Fed will maintain its pace of bond buying through this year before scaling it back in 2014.

“Today’s report is perhaps the perfect number for nervous investors,” said James Marple, Senior Economist at TD Economics. “It is strong enough to point to continued economic recovery but not so strong as to bring forward expectations of Fed tapering.”

Other analysts who have predicted that the Fed would start trimming its bond purchases later this year said they didn’t think Friday’s jobs report would change that timetable.

John Canally, an economist at LPL Financial, blames the Federal Reserve for not specifying how much monthly job growth it wants to see before it scales back its bond buying.

“They have not been transparent enough,” Canally said. “That is what has unhinged markets.”

Americans appear more optimistic: 420,000 people started looking for work in May. As a result, the percentage of Americans 16 and older either working or looking for work rose to 63.4 percent from a 34-year low 63.3 percent in April.

This is called the labor force participation rate. Higher participation can boost the unemployment rate. That’s because once people without a job start looking for one, they’re counted as unemployed.

Many people who entered the work force last month didn’t find jobs right away. As a result, the number of unemployed rose 101,000, and the unemployment rate rose.

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