Consumer confidence may be on the rise in the U.S., but almost half of Americans believe it is more difficult now to find employment than it was a year ago, according to results from the March RBC Consumer Outlook Index.
According to the index, which surveyed more than 1,000 Americans, 49% believe job hunting is harder now than it was last year at this time. Just 14% of respondents believe it’s become easier.
Tom Porcelli, chief U.S. economist with RBC Capital Markets, says U.S. consumers aren’t necessarily wrong in their beliefs. “The Jobs Sub-Index, which rose slightly this month, has remained just above the breakeven point for the past five months, and this suggests that employment gains are likely to remain modest in the near-term. In addition, only 48% of consumers who are either unemployed or underemployed, or who know someone who is, are willing to change careers or learn new skills. This finding suggests a lack of capitulation by job seekers, which likely contributed to the natural rate of unemployment rising from 5% to closer to 7%. The absorption process for the unemployed may be a slow, drawn-out affair.”
Porcelli said continued sluggishness in the housing market is also playing a role in unemployment. Results from the Index show that only 235 of unemployed or underemployed Americans are willing to relocate to an area where the job market is better. Another 20% are willing to move for better job prospects in theory, but aren’t likely to actually do so because of the difficulty of selling their home.
Despite the lack of optimism around the job market, the index shows consumer confidence for April is at 44.8, up from 42.5 the previous month. Porcelli says that while that figure remains historically low, rising consumer confidence reflects the fact that the country’s economic recovery remains on track.
In contrast to the RBC Consumer Outlook Index showing Americans’ pessimism toward job prospects, IHS Global Insight chief U.S. economist Nigel Gault says the March employment report released today by the U.S. Department of Labour point to an underlying acceleration in job creation across the country. According to the report, March payrolls rose 216,000, a stronger showing that February’s increase of 194,000. The unemployment rate also continued its downward trend, falling to 8.8% from 8.9% the previous month; it has fallen by a full percentage point in four months.
Gault’s analysis says U.S. GDP growth appears to have decelerated in the first quarter to around 2.5% from 3.1%, even as the labor market has picked up. He speculates that firms may be finding it more difficult to raise productivity, and are hiring more staff just to keep growth going.
“The bottom line is that the labor market evidence suggests that the economy had good momentum that will allow it to absorb the twin shocks from the Middle East and Japan without too much damage to growth – which should still come in close to 3% for 2011,” writes Gault.