May proved to be another good month for the jobs market, as payrolls rose more than expected, potentially signaling further economic growth, as it was able to limit the impact of higher taxes and federal spending cuts.
Should the employment situation provide a boost to the economy, small- to medium-sized manufacturers and wholesalers might have to increasingly rely on purchase order financing as they take on additional business.
Nonfarm payrolls jumped by 175,000 positions in May, according to the U.S. Bureau of Labor Statistics, with employment rising in professional and business services, food services and drinking places, as well as retail trade. This was higher than expected as economists surveyed by Bloomberg called for 163,000 more jobs.
More positions being added could be a sign that companies are optimistic about demand in the second half of the year as the impact of tax hikes on consumer spending eases.
"Things aren't weakening in the labor market as much as we'd feared," Omar Sharif, U.S. economist at RBS Securities, told Bloomberg. "The unemployment rate rose for the right reasons. More folks are coming back into the labor market, or coming for the first time, but more important the economy is able to absorb most of them."
If the economy begins to see accelerated growth in the second half of the year, manufacturers and wholesalers could begin to see additional business. For example, these companies may receive a large order from a big-box retailer, such as Target or Walmart.
In most cases, smaller businesses are unable to fill these types of orders on their own so they need to rely on some sort of financial assistance. Purchase order financing can enable a company to receive up to 100 percent of the funds needed to fill an order.