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Department of Labor reports increased unemployment in February

The Department of Labor reported that the energy sector will cut an estimated 20,246 jobs, 1,682 more than reported in December. Photo by Joseph Esposito

The Department of Labor reported that the energy sector will cut an estimated 20,246 jobs, 1,682 more than reported in December. Photo by Joseph Esposito

According to an analysis report released by the Department of Labor, the number of Americans filing for unemployment benefits has increased by more than 8,000 within the first week of February.

The data suggests that 2016 has faced a slower start in the labor market in comparison to the past few years due to economic slowdown in the stock market. The report indicates that as of this year, there has been a 218-percent jump in job cuts by employers based in the United States. The layoffs were concentrated in the energy and retail employment sectors.

The increase in layoffs is due to the slow economic growth experienced by the United States. It is reported that in the fourth quarter, the economy grew 0.7 percent, a very minute increase comparative to years before. The initial claims for state unemployment benefits drastically increased by 8,000 to 285,000 for the week of Jan. 30. The claims for state unemployment continued to remain under the 300,000 mark, for the 48th week in a row. This is cited to be the longest reigning period of time that unemployment has remained under 300,000.

One source of strain on economic growth is the decrease in capital spending by energy companies. With fallen gas and oil prices as well as “inventory destocking” by businesses, there are numerous, evident sources of decline. Additionally, the stock market has simultaneously faced decline due to fear of economic instability across the globe. Downward economic trends have been evidenced by the global outplacement consultancy Challenger, Gray & Christmas Inc.

The career-placement firm reported that 75,114 job cuts were documented by employers last month.  This is an increase from the December low of 23,622. Additionally, the job cuts in January were the highest logged since July 2015. This is a negative statistic for the first month of the year.Chris Rupkey, chief economist at MUFG Union Bank in New York, released the following statement with regards to the pending economic troubles, “The future is somewhat darker … the labor market may be past its peak for this cycle. It looks like the labor market has scaled back its rapid advance last month.”

National retailers have announced their plans to remove approximately 22,246 jobs from their payrolls.

This number is the highest documented since January 2009, amidst the recession of 2008. Walmart, the chain of international retail stores specializing in food, technology, clothing, etc., announced plans to close 269 stores worldwide, cutting more than 10,000 jobs in the United States alone. Firms in the energy sector plan to cut 20,246 jobs, 1,682 more than reported in December. This is likely due to decreased energy costs.

The third report developed by the United States Commerce Department recorded that new orders for manufactured goods dropped by 2.9 percent in December after falling by a 0.7-percentage rate in November. This is cited to be the largest drop in a single year.The value of the dollar also fell to a three-month low over the course of time. This change is due to investors pulling back in anticipation of decline. As stocks plunged in trading, the United States government’s debt turned to a rise. 

Additionally, in the fourth quarter, the price of labor per output increased 4.5-percent. This is the fastest recorded rate in a year. Labor rate rose 2.4-percent in 2015, the highest rate in nine years.Farm productivity also faced a decline at a 3.0-percentage rate.  The decline of a 3.0-percentage rate is the largest drop recorded after a whole year, after it was reported to have risen at a 2.1-percent rate.The rate of productivity only grew by 0.6 percent in 2015, recorded to be the smallest gain in three years. The rate’s annual increase is recorded at less than 1.0 percent for each of the past five years. This is accredited to the lack of investment from citizens of the United States.All productivity rates reflect the decrease in GDP growth. The change from then to 2016, though, is indicative of decline.

Although the statistics are comprehensively recorded, some economists, such as Rob Martin of Barclays, feel that the judgment made thus far cannot be accurate until more time has progressed. He stated the following, “To date, even taking the recent rise as given, the increase (in claims) is not sufficient to change our view that the expansion remains intact and that the economy is far from recession. Claims are very volatile.” The reason that many economists are unsure of the permanence of the downward layoff trend is due to the conditions of January.

The impact of the blizzard on the Northeastern coast of the United States in the middle of the month has contributed to the layoffs. The increase in losses in the energy industry is also  linked to the decrease. In addition, economists link the post-seasonal job season to the month’s decline.Economists also suggest that the Federal Reserve will probably not raise interest rates in March. Although the Central Bank raised its short-term interest rate in December for the first time in nearly a decade, it is not unclear whether or not the Fed will raise it again.

February 15, 2016

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