It Could Be Worse: Jobs Data, Surveys Give Cautiously Optimistic Signals about Economy
The Michigan and national economies are likely to remain sluggish for a while longer. But, reports released last week provided reasons for cautious optimism – or, at the very least, reduced pessimism.
Nationally, employers cut far fewer jobs in April than in recent months and the unemployment rate dropped to 5 percent, according to the U.S. Department of Labor. The loss of about 20,000 jobs was not exactly good news. But it was a better-than-expected showing and a big improvement from the 81,000-job reduction seen in March.
Production, employment, and new orders expanded and finished goods inventories were lowered among survey respondents.. All of that caused the composite index to climb to 54.6, 1.5 points above March. Index readings above 50 indicate an expanding manufacturing sector.
According to the survey used to compile the index, 85 percent of the respondents do not feel we are currently in a recession. There was, however, widespread concern about the cost of basic materials, which continued to aggressively increase across a wide range of products.
Sixty-two percent of April’s respondents answered “about the same” when asked about the future business environment. That could be seen as a movement toward an economic turnaround, given that the business environment is not seen as continuing to deteriorate, according to Allardice, who is director of doctoral programs at Walsh.
Twelve percent of survey respondents believe conditions will be “less stable,” while 27 percent anticipate “more stability.”
In an interview with WWJ Newsradio 950, the Small Business Association of Michigan President Robert Fowler, said Michigan companies are starting to benefit from the cost-cutting and reorganizations forced on them during the state’s recession.
“Our companies in Michigan have made the hard decisions for the last four or five years to cut back, to redirect, to go through the transitions that businesses do during an economic downturn,” Fowler said. “And in many ways we may be in a position to lead out of this … national funk we find ourselves in.”
Nationally, economists were bracing for job cuts of 75,000 and for the unemployment rate to climb to 5.2 percent, according to the Associated Press. Instead, the jobless rate fell to 5 percent from 5.1 percent in March, according to the Labor Department’s data. Meanwhile, workers with jobs saw small average wage increases.
Average hourly earnings for jobholders rose to $17.88 in April, the Labor Department said. That was a tiny 0.1 percent rise from the previous month and less than the 0.3 percent rise economists were forecasting. Over the last 12 months, wages have grown by 3.4 percent.
CEOs a Bit More Confident
Another slightly sign for the national economy came from Chief Executive magazine. The publication’s CEO Index rebounded slightly in April, rising about 13 percent to 96.4 points. However, the Index still continues to hover around its lowest levels since 2003 and 63 percent below where it was this time last year.
The CEO Index is made up of five components: current confidence, future confidence, business conditions, investment confidence and employment confidence. In April, Future Confidence Index recorded the sharpest increase, rising 15.7 percent to 84.4 points.
"While far from confident, many CEOs are starting to wonder if the economy is at the low-point of past several months," Edward M. Kopko, CEO and publisher of Chief Executive magazine, said in a statement. "According to our research the economy is in a very precarious position right now. CEOs are torn over whether the worst is over, but when they do become more confident, they will add much-needed fuel to our economic engine."
Employees Send Mixed Signals
The Spherion Employee Confidence Index, a monthly gauge of overall worker confidence, declined 0.3 point to 46.2 in April, decreasing for the ninth consecutive month and reaching a new low. However, while 73 percent of workers believe the economy is getting weaker, the majority of workers (52 percent) say they are confident in their ability to find a new job, down only one percentage point from March.
Sixty-five percent of workers surveyed by Spherion expressed confidence in the future of their current employers, an increase of two percentage points. Seventy-eight percent feel it is unlikely they will lose their current jobs – an increase of one percentage point from March.
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The Michigan and national economies are likely to remain sluggish for a while longer. But, reports released last week provided reasons for cautious optimism – or, at the very least, reduced pessimism. 
