US Unemployment drops - Down 0.3% to 9.7%

Go the Fed! Under intense pressure, Ben Bernanke has been able to create some decent numbers regarding the employment situation.

A reduction of 0.3% isn't too bad in the situation today. However, there were a couple of early indicators that the employment situation in the US was starting to improve.

Firstly, Labour Force Productivity was up (including an increase in hours worked). Labour Force productivity is the Output/no of hours worked. Traditionally, during a downturn, productivity goes up naturally as people are laid off. Hours worked decreases because of the layoffs causing the increase. However in the most recent figures, hours worked increased as well as the productivity. This meant that people were starting to hire again.

Secondly, we have had a couple of quarters of economic growth. Unemployment is a trailing indicator of economic growth (i.e it follows growth, not precedes it). The reasons for this is due to the participation rate increasing when growth increases (people re-enter the workforce and are recorded in the unemployment stats, causing a bump in numbers) and the productivity increases (employers try to deal with increased demand with existing employees initially rather than hire).