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Will the economy pick up in second half of 2015?
The Labor Department's March Job Report was a disappointment for those buoyed by the past year's job creation success. According to Bloomberg, the report suggested that the factory sector is struggling, which has had a significant effect on the broader economy. Many economists blame port disruptions and bad winter weather as the culprits behind these changes, but some also feel that a stronger dollar is what's negatively affecting the export sector and domestic industry.
The report's main takeaway for many business professionals was the fact that only 126,000 new jobs were added in March, which is just half of what was projected. It was the first time in a year that there weren't at least 200,000 new jobs in a month. A recent ProOpinion poll found that 25 percent of business professionals considered this the most prominent fact of the business market research, while 20 percent thought the unemployment rate remaining unchanged at 5.5 percent was most significant. Just 12 percent of professionals considered wage growth, which grew 7 cents per hour, the most important.
"Mining, which includes the oil industry, lost 11,000 jobs in March."
What's behind the downshift?
The New York Times reported that analysts are blaming the plunge in oil prices and the difficult winter across the Northeast and Midwest as the main reasons behind decreased consumer spending and construction. While lower gas prices are exciting for consumers, there's a weakness in the job market as a result, noted The Wall Street Journal. According to the Bureau of Labor statistics, mining, which includes the oil industry, lost 11,000 jobs in March. The source pointed out that supporting services for extraction were also hit.
"The American energy industry is adjusting very quickly to low oil prices, and we've seen this in the counts of the number of rigs that are active," Carl R. Tannenbaum, chief economist at the Northern Trust Company, told the Times. "The bad news is we're losing some jobs. The good news is, we hope, that the average consumer is saving a tremendous amount of money in lower gasoline prices."
Of course, some of the slowdown can be attributed to the horrific weather conditions many parts of the country dealt with over the winter. Last year's lackluster Q1 was mostly blamed on the extreme cold and excess snow that was similar to what the Northeast and Midwest went through this year.
According to Forbes magazine, Luke Tilley, chief economist at Wilmington Trust, said during an interview about the report that manufacturing has slowed down for two months in a row because of the strong dollar. Big multinational firms have identified dollar strength as an earnings hurdle that decreases profit they're getting from abroad. These conditions also make buyers more likely to look overseas for cheaper options, reported the source.
"Although the economy is much better than it was right after the recession, unhindered upward growth still hasn't happened."
Is there hope for an upswing?
The Atlantic noted that although the economy is much better than it was right after the recession, unhindered upward growth still hasn't happened, and that's what many economists were banking on. However, all is not lost.
"[March numbers were] lower than expectations, without a doubt," said Thomas E. Perez, the secretary of labor, according to the Times. "But I've always said that one month never makes a trend."
Tilley was also optimistic about the second half of the year. When speaking about the report, he noted that, "Although disappointing, we don't think it portends a turnaround for the U.S. economy," reported the Times.
Overall, March's industry research was a bit of a letdown, and while the Federal Reserve uses the report as one way to measure the strength of the economy, business professionals shouldn't start worrying unless the next few months' job reports are also disappointing.
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