The world awaits the release of new employment figures by the U.S. Department of Labor this Friday.
Economists expect an increase of 135,000 jobs, slightly higher than the 126,000 gain for October. The unemployment rate is expected to have edged down to 5.9 percent in November from 6.0 percent in October.
A number of reports released so far this week show that the economy continues to surge. Data from the Institute for Supply Management shows that both the manufacturing and non-manufacturing sectors are expanding at a healthy pace. New orders for goods and services are increasing, as are order backlogs, both of which are positive signs for future growth.
While the economy has been growing for the past several quarters, job creation has only recently resumed, following a long and painful decline. Economists have long known that employment growth tends to lag behind economic growth, as businesses wait to see if economic growth will be sustained before adding workers. But this time, the lag has been unusually long by historical standards.
Solid and steady job creation is vital to ensure a strong and sustainable economic recovery because consumer spending makes up nearly three-quarters of the economy in dollar terms. Continued growth in the economy, in turn, will go a long way toward ensuring that the recent pickup in business technology spending is also sustainable in the longer run, which would be welcome news for both solution providers and vendors.
Should the actual employment data fall short of expectations--and this is a possibility, given that productivity is growing at a blistering 9.4 percent annual rate--it would throw cold water on the notion that the economy is finally out of the woods.
This, in turn, could also trigger renewed hesitation on the part of businesses when it comes to technology spending, which has shown recent signs of strength, and lead to further declines in the value of U.S. dollar against foreign currencies. While a lower dollar value might boost channel earnings in the short run by increasing overseas sales, it could also force the Federal Reserve to raise interest rates in order to make the dollar more attractive to overseas investors. That, in turn, would be another negative for economic growth going forward.
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