Oil Industry
The plunge in oil prices is weighing on producers and companies that build equipment and supply materials to the industry. U.S. Steel Corp. in late March notified 2,080 workers at an Illinois factory about potential dismissals. The country’s second-biggest producer of steel cited adverse market conditions including cheap imports and lower oil prices.
The economy probably expanded at a 1.5 percent annualized pace in the first quarter, according to the median estimate in a Bloomberg survey of economists. That’s down from a 2.2 percent rate in the last three months of 2014.
Figures on car purchases in March indicate consumer spending may be set to pick up. Motor vehicle sales rose in March to a 17.1 million annualized rate, matching the strongest pace since August, based on figures from Ward’s Automotive Group.
‘Renewed Momentum’
“We expect a firming labor market and still-low fuel prices and interest rates to support renewed momentum in economic activity as spring takes hold,” Emily Kolinski Morris, chief economist at Ford Motor Co., said on an April 1 sales call.
Some businesses are expanding. SolarCity Corp., the biggest U.S. rooftop solar installer, said in March that it plans to hire at least 300 people to expand its sales force. The new employees will work at an office in Roseville, California.
Further hiring would help alleviate slack in the labor market and allow wages to pick up. The outlook is improving for earners at the lowest end of the income scale. McDonald’s Corp. this week was the latest to announce plans to boost worker pay above the minimum wage. Wal-Mart Stores Inc., the largest U.S. discount chain, and Target Corp. are also making similar moves.
Federal Reserve Chair Janet Yellen said at a March conference that she expects the central bank to raise interest rates this year, and that subsequent increases will be gradual without following a predictable path.
The job market is “likely to improve further in coming months,” she said. At the same time, progress on meeting the Fed’s inflation goal has been “notably absent.” Some of the weakness in inflation “likely reflects continuing slack” in labor markets.