Unemployment and inflation remained above-average in May

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On June 1st, the BLS released its latest “The Employment Situation” report, which revealed that job growth remained sluggish within the United States for the third consecutive month in May.
According to the report, only 69,000 new jobs were added to the national economy last month, while the nation’s jobless rate rose from 8.1 percent in April to 8.2 percent in May, the first month-to-month unemployment increase recorded since June 2011. The report also found that nearly 12.7 million Americans were without work last month – and nearly 45 percent of the country’s unemployed have not worked for six months or more.

Shortly after the release of the United States’ most recent jobs report, Statistics Canada and the Banco de Mexico revealed their latest findings regarding employment and consumer prices. Prior to the release of Canada’s labor force survey and Mexico’s annual inflation statistics, some economists predicted a rise in both employment and inflation, citing Canada’s recent hiring increases and Mexico’s upcoming presidential election as primary reasons.

But were their predictions correct? Did Canada’s employment situation continue to improve in May? And did the nation’s Purchasing Managers’ Index recover from April’s sharp decline? Did Mexico’s annual inflation figures actually increase last month – or did they continue to contract?

In April, the nation’s seasonally-adjusted Ivey Purchasing Managers’ Index declined on a month-to-month basis for the first time in 2012, dropping to 52.7, nearly 17 points below February’s index, which was a 12-month high. Since then, the index has begun to rise, increasing by 7.8 points. At 60.5, the index is currently below its 12-month trailing average; however, since it is still above 50, more Canadian firms reported higher purchases in May than in April. On the other hand, two of the index’s sub-indices, employment and suppliers, were measured below 50, which suggests that demand declined last month. In addition, each of the index’s four sub-indices, including inventories and prices, diminished from April to May.

Meanwhile, employment remained below-average last month, rising by only 7,000. The country’s jobless rate remained unchanged for the second straight month in May, at 7.3 percent. Approximately 17.5 million Canadians were employed last month, an increase of 1,200 when compared to May 2011’s statistics. 14.2 million workers were employed full-time, an increase of 1,400 on both a month-to-month and year-ago basis. Overall, 18.9 million Canadians were members of the labor force in May, an increase of 1,100 on a year-to-year basis.

Total inflation dropped for the second successive month in May, down to 103.9, according to the Banco de Mexico. Annual inflation rose by 3.9 percent last month, an increase of 0.5 percent in comparison to April’s annual inflation data. At the same time, total underlying inflation, underlying inflation for goods, and underlying inflation for services also rose from May 2011 to May 2012, by 3.7, 4.5, and three percent, respectively.

The month-to-month rise in annual inflation likely occurred as a result of the nation’s current presidential campaign expenditures, which has led to an increase in consumer prices. Mexico’s general election, which features candidates such as Andrés Manuel López Obrador, Enrique Peña Nieto, Josefina Vázquez Mota, and Gabriel Quadri de la Torre, will occur on July 1st. Consumer prices will likely remain higher this summer than they were in early 2012, but they are not anticipated to rise considerably either. The election is also not expected to influence the nation’s monetary policy, which has not been raised or lowered for 35 consecutive months. At 4.5 percent, the rate is currently two percent below the bank’s neutral nominal rate.

For more information, please visit www.workplaceeconomy.com.

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