The US manufacturing industry hits its lowest quarter in over three years this month. And as a result, these firms were forced to lay off in order to prevent closing down. Hence, there has been an increase in the Americans filing for jobless claims. This recent turn of the US economy suggests that the economy is not growing as steadily as what was previously claimed.
It was Markit, a financial information firm, which conducted the study on the economy this last quarter. According to the reports that they have accumulated, the manufacturing Purchasing Managers Index are at 51.5 this quarter. Although anything above 50 is already an indication of expansion, the recent reading is actually unsatisfactory granted that the months between April and June have registered a reading of 54.2.
Because of its huge discrepancy in number, it has been established that this quarter’s reading is the lowest since the September of 2009. The 51.5 index is also the lowest output component today.
With the other sectors slowly yet steadily climbing, the manufacturing industry could be that iron bar that drags everyone down. Economists further explain that after the initial growth of 1.7 percent annually, the economy is more likely to slip into stagnation with the unreliable statistics from the manufacturing sector.
Jobless Claims Increase As Bad credit loans Decrease
According to the Labor Department, the 4-week information on the jobless claims rose to 377,750. The number is noted to be the highest increase since June. Economists attribute the increase in claims to the recent onslaught of Tropical Storm Isaac but there are also fundamental weaknesses in the economy to point to.
Another toll behind the manufacturing industry’s back would be the fact that Major US stock indexes opened lower. It appears that the investors are afraid of putting out money with the financial strain bubbling in Europe and China.
The good news is, US employers have added about 96,000 jobs just last month. This addition may only cater to a minute part of the jobless population but at least, there’s little help still coming in. Although the unemployment rate dropped to 8.1 from 8.3, it is not something to feel happy about. This is because the drop in the unemployment rate is only largely because a lot of Americans have already given up their search for work.
Also overly affected in the recent turn of events would be the lending market. Even with all the external help coming from the nontraditional lending institutions and with the no credit check requirement, a proof of active employment is still one of the main requirements needed. Even with bad credit loans, this basic requirement remains the same.
Federal Reserve To Launch Stimulus Program
Because of the current conditions of the labor market, the Federal Reserve was prompted to launch an aggressive stimulus program that is supposed to help increase employment. The program will work by buying a $40 billion worth of mortgage-backed securities every month for an indefinite period of time.
Over time, the manufacturing industry should be able to steadily rise and thus, no more workers will be laid off. But it will not be only the manufacturing industry that will benefit from this aggressive stimulus program. In fact, all the factors of the economy will get the help that they need.
Therefore, the current unemployment rate will most likely improve soon. With that, more can take advantage of bad credit loans that are readily available online and offline for their personal emergencies. The US economy is getting all the help that it can possibly get; hopefully, these will be enough for the economy to sustain traction.