The US jobs market produced a spring spurt to banish the winter weakness. Employers added 280,000 jobs in May, the most in five months, further dispelling fears that a first-quarter slowdown would take hold. Hourly earnings climbed from a year ago by the most since August 2013, while an increase in the number of people entering the US Jobs market caused the unemployment rate to creep up to 5.5 percent from 5.4 percent. The report bolstered the case for Federal Reserve policy makers to begin raising rates this year.
Broad-based employment gains from builders to trucking companies to local governments show hiring managers are confident the economy will regain its footing after faltering early this year. The dollar surged to a 13-year high versus the Japanese yen and Treasuries tumbled.
May job growth was driven by a 256,000 jump in the private service sector. Retailers, temporary-help agencies, restaurants, hotels and health-care providers also boosted headcounts in May.
American workers are being compensated better. The Labor Department said average hourly earnings increased 0.3 percent in May from the prior month, the biggest gain since January.
The UK’s biggest business body (CBI) said that it believes the economy will grow healthily for the remainder of the year, after stalling in the first three months. To the surprise of most economists, the UK economy grew by just 0.3 per cent from January to March, its slowest rate since 2012. If it continued expanding at that rate, economic growth would barely surpass 1.2 per cent this year. Yet the Confederation of British Industry (CBI), which represents around 190,000 firms, believes this will be a blip.
It predicts the economy will bounce back to grow by 2.4 per cent this year. The rebound is expected to be immediate, with the business body anticipating 0.8 per cent growth in the economy from April to June. Despite growth prospects looking healthy at home, the CBI warned there are headwinds to the recovery, with a still sluggish Eurozone and renewed uncertainty over Greece’s economic future.
The Eurozone is the UK’s biggest export market and its failure to achieve a sustained economic recovery from the 2008-09 dip has impacted the UK’s trade balance, the difference between exports and imports. This has acted as a drag on growth.
Consumer spending accelerated in May as shoppers splashed out on hotels, restaurants and bars. Spending climbed 2.6 per cent in May compared to the same month last year. The last three months have seen the strongest three-month average increase in expenditure since January 2008. Spending on hotels, restaurants and bars shot up 10.3 per cent on the year. Consumers also spent 3.9 per cent more on recreation and culture. High street spending was 3.2 per cent greater than it was in May 2014, the fastest gain for over a year.
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