Positive Report from Labor Market May Not Convince the Fed

By TraderVox.com

Tradervox (Dublin) – A report from the labor market is expected to show that employers took more than 200,000 workers in February alone making it the third straight month that employers have increased employment. Some Economists are, however, skeptical whether this will be convincing enough for the Federal Reserve Chairman Ben S. Bernanke who reiterated his remarks that labor market remains far from normal. He also added that the interest rates will remain close to zero at least through to the end of 2014.

According to Chris Rupkey who is a Chief Financial Economist at Bank of Tokyo-Mitsubishi UFJ Ltd, the pace of job creation indicates that the expansion is likely to handle any news headwinds. He added that the Fed might be cautious since the economic growth has been disappointing so far. The labor report is expected to be released today at 8:30 am in Washington.

According to some surveys, the payrolls estimates may increase from 125,000 to 275,000. The January gain is the largest since last April when employers took 251,000 workers. The projected gain in February will mark the best six-months of job growth since the period ending June 2006. The expected expansion has had effects on the share prices as well as causing an increase of 0.8 percent in the Standard and Poor’s 500 Index.

According to Richard Fearon, a Chief Financial Officer at the Eaton Corp., the increased demand for the tractor-trailers has led to more hiring. This is just one of the companies that have increased its manpower due to increased hiring. There has been a reduction of 0.8 percent in the unemployment rate since August last year. There is also a reduction in dismissals in the companies, which is an indication of confident in the economic outlook.

A report released last week by the Commerce Department indicated that the US economy grew by 3 percent annual pace in the fourth quarter after increasing by 1.8 percent in the previous quarter. However, Bernanke, in his Feb. 29 testimony to congress, the unemployment rate remains at a record low in the long term. These sentiments have analysts and economists to believe that the Fed might not yet be convinced by the recent job market reports.

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