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May 2, 2014

Strong jobs report could improve consumer confidence

The Labor Department's April jobs report provided some strong figures, and this development could easily help bolster the sentiment of everyday Americans.

As the jobs situation gets better over time, and more people are gainfully employed, consumers should have more money in their pockets. This stronger financial state, along with their more robust optimism, could increase their demand for credit.

Such a development could potentially increase loan origination. In addition, it could help strengthen loan sales by increasing the supply of available debt.

April jobs data very robust
Figures from the Labor Department showed that in April, U.S. employers added a net 288,000 positions to payrolls. This result was the strongest in more than two years, according to USA Today. The figure also surpassed the predictions of market experts. Economists polled by Action Economics predicted an increase of 210,000.

Alternatively, market experts participating in a survey conducted by The Wall Street Journal forecast a 215,000 gain. Revised figures for both February and March showed that employers added more jobs than thought originally. Government data indicated that they added 220,000 during the former month, compared to previous estimates of 197,000. The labor market gained 203,000 new positions in March, up from 192,000.

"Employers are hiring at a robust pace, seemingly shrugging off the weakness in recent months," Jim Baird, chief investment officer of Plante Moran Financial Advisors, wrote in a note sent to clients, according to the news source. "It appears that employers have bought into the idea that the weak stretch was weather-driven and would pass with time. Given April's strong job gains, it looks increasingly likely that growth should pick up sharply in the second quarter."

Various reports support this idea that the broader economic recovery is picking up, the media outlet reported. Commerce Department data showed that in March, consumer spending increased by the most in close to five years. Figures supplied by the Institute for Supply Management indicated that in April, a gauge of manufacturing activity rose to a four-month high.

Economists predict stronger jobs recovery
At the same time that these encouraging figures are being released, many economists have stated that the current job growth will likely accelerate in the near future, USA Today reported. Scott Brown, chief economist of Raymond James, stated that rising demand for goods and services will compel small companies to hire, even though these organizations have been reluctant to take on the costs of new workers.

The market expert also predicted that wage growth could pick up soon as slack declines in the labor market, according to the news source. Many have predicted that once the jobless rate falls below 6 percent, wages could really take off. Higher compensation would give consumers more money to play with, and could make them more willing to take on debt.

In the event that Americans do seek more debt and loan sales move higher, financial institutions that want to get involved with such transactions might consider contacting Garnet Capital Advisors, which has significant experience in this space.