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Job Growth Slowing as Trade Deficit Hits 10-year High

The drop in soybean exports and the record high increase in imports of consumer goods has created a US trade deficit which is at a 10-year high. This would mean that the Trump administration’s tariff-related measures to reduce the trade gap have been ineffective.

New data suggests that private employers hired fewer workers than expected in November and this points to the moderation in the pace of the job growth. This was reinforced by yet another report that showed a decline in the number of Americans filing claims for unemployment benefits.

Trade deficit affects job growth

The report maintains that weak housing and business spending on equipment data signals a slowdown in economic growth. There have been concerns over the health of the economy that has upset the financial markets in the last few days.

Increase in Trade Deficit

Also, the Commerce Department suggested that the trade deficit has increased by 1.7% to $55.5 billion, the highest its ever been since October 2008. This trade gap has widened for 5 straight months. Revised data show that there is a deficit rising to $54.6 billion instead of the previously reported $54 billion.

Similarly, the politically sensitive goods trade deficit with China has surged 7.1% to record $43.1 billion in October. There is a bitter trade war which is brewing between the United States and China. There are imposed tariffs on $250 billion worth of Chinese imports to force concession on the list of demands that would change the terms of trade between the two countries.

Sino-American Trade War

China has now created new import tariffs on US goods in response. President Trump accuses Beijing of not playing fairly on trade. Additionally, to the Chinese goods, Washington was slapped with tariffs on steel and aluminum imports into the United States. While President Trump and President Xi Jinping agreed to hold off on imposing more tariffs for 90 days while they negotiate a deal to end this trade dispute.

After the arrest of Meng Wanzhou, CFO of Huawei Technologies and the daughter of its founder, this truce seems to be in jeopardy.

The overall trade deficit is forecast to rise to $55 billion in October. When it is adjusted for inflation, the good trade deficit was increased to $87.9 billion in October from $87.2 billion in September. This so-called real trade deficit above the average for the third quarter.

Trade, Stocks, and Exports

Trade subtracted 1.91 percentage points from GDP growth in the July-September quarter. Growth estimates for the fourth quarter are at 2.8% annualized rate. But owing to this, the economy still grew at a 3.5% pace in the third quarter.

But US stocks are trading sharply after Wanzhou’s arrest which has sparked fears between the Sino-US tensions. Also, the prices of the US Treasuries were trading higher while the dollar was weaker against several other currencies. Also, in October, exports of goods and services slipped by 0.1% to $211 billion. China has targeted the Soybean exports in the trade dispute and this has been dropping for the last several months and fell $0.8 billion. Exports of civilian aircraft and engines also fell.

Additionally, exports of petroleum and consumer goods were the highest on record. A strong dollar is probably restraining the overall export growth.

Imports Reach a Record High

With the trade deficit reaching an all-time high, this would mean that imports would have sky-rocketed. Imports of goods and services rose by 0.2 percent to $266.5 billion which is an all-time high. Consumer goods imports increased by $2 billion to a record high of $57.4 billion and were boosted by a $1.5 billion increase in imports of pharmaceutical preparations.

Another item that reached its highest record is motor vehicles as were other imports of goods. Imports are driven by high domestic demand as well as the strong dollar which is making the prices of imported goods cheaper and this offsets the impact of the tariffs.

At the same time, the ADP National Employment Report showed private payrolls rose by 179,000 jobs in November after the downwardly revised increase of 225,000 in October.

The forecasts show that private payrolls advanced 195,000 last month following a previously reported 227,000 increase in October.

This ADP report which was jointly developed with the help of Moody’s Analytics published ahead of the government’s more comprehensive employment report for November which is scheduled for release on Friday.

Nonfarm payrolls are likely increased by 200,000 in November after surging by 250,000 in October. The unemployment rate is forecast holding steady at half a century low of 3.7%.

Though the ADP report is a record that predicts the private payrolls component of the government’s employment report, job growth looks like its slowing. The main reason for this is due to the shortage of qualified workers.

The Decline in Hiring and Claims

In its third report, the Labor Department expressed that the initial claims for the state unemployment benefits dropped 4,000 to seasonally adjusted 231,000 for the week ended Dec. 1. Even though claims have fallen to 225,000 in the latest week, claims have risen for three straight weeks touching an eight-month high of 235,000 during the week ending November 24.

This is a reason to believe that the labor market has reached its peak. While job layoffs have increased, there is an uncertainty over facing tariffs and the stock market turbulence may have to be dented confidence as well, for companies that are trimming their staff.

The fourth report by the Institute for Supply Management (ISM) expressed that its non-manufacturing activity index rose 0.4 points to a reading last month of 60.7. Any reading above 50 indicates expansion in the sector which accounts for more than two-thirds of activity in the US economy.

But this time around, the ISM’s employment measure fell 1.3 points last month with employers in the construction industry reporting difficulties finding workers due to lack of qualified talent. Only time will tell if job growth would be triggered by policy-making and the change in trend in the job market.

You can read more about the unemployment situation in the US and stay updated. 

20 thoughts on “How To Survive Unemployment”

  1. I work for a car wash in Reno,NV. Now that its winter time can I file a claim to make up for the lack of hours I was accustomed to before winter. now granted the people in charge are always screaming we gotta keep labor down. To me the way they keep labor down is not giving the employees there schedueled breaks and making them punch out for an additional 30min. Now because of that I lose more than 10 hours per week. that’s affecting my pay check tremendously. So my question is can I file a claim to make up the difference and keep my job?

    1. Henry,

      If you’re on the rolls of your employer (not on contract) and the employer remits unemployment taxes into the system, you can be eligible to claim partial UI benefits.

    1. Stephen,

      You should have applied for benefits during the period of unemployment. You will not be able to claim in retrospect. Please call the Unemployment Office for clarification.

  2. WHEN AND WILL NEVADA SEND ME A 1099-G ,FOR U I BENEFITS RECIEVED FROM, 9/2018 TO END OF YEAR,EVEN THO I AM STILL GOING TO BE RECIEVING BENEFITS TILL 3/2019 POSTAL OR ONLINE? I HAD TAX WITHHELD SO I GUESS I NEED IT TO FILE

  3. I worked in PA for the last 8 months and for 4 years in NJ before that. There was no break in employment. I was laid off yesterday from the PA job. I think I should apply in PA but how would I make sure that wages from both states are accounted for?

  4. I worked in Maryland for 5 years and was on Maryland unemployment for a month before finding another job and should still have an active Maryland claim there. The new company I work for is based in Virginia and I started in early November until the government shutdown in late Dec. Should I file a new claim in Virginia or continue with Maryland UE? Also I picked up a part time job on weekends 3 weeks ago averaging about 18 hours. How would that work?

    1. Matt,

      Since you’ve already filed a claim in Maryland, please wait for a determination to be made. You should report the income from the part-time job to the Unemployment Office. Please call the Claims Center.

    1. Ralph,

      The E.U.C(Emergency Unemployment Compensation) remains expired. There is no extension available. Please inquire further with the labor authorities in your state by calling them.

  5. I worked in Washington State in January, 2017 to March, 2018. I worked in Montana from March, 2018 to March, 2019 My residence is in Washington State. Which state do I apply for Unemployment Insurance?

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