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Improving jobs market could lead to more lending in near future

Jun 10, 2013 Philip Burgess

With the employment situation showing continued signs of improvement, borrowing in the United States could pick up in the coming months.

The ADP National Employment Report revealed the private sector added 135,000 jobs in May - all coming from the service providing sector.

Based on company size, small businesses added 58,000 jobs, while medium and large businesses each created 39,000 positions.

Mark Zandi, chief economist at Moody's Analytics, pointed out that job growth has slowed since the beginning of the year, but May added more positions than April, which could signal a pick up in momentum moving forward.

"The job market continues to expand, but growth has slowed since the beginning of the year," he said. "The slowdown is evident across all industries and all but the largest companies."

Russell Price, senior economist at Ameriprise Financial, told Reuters that the jobs market is starting to gain traction. Additional positive signs include improving consumer spending and attitudes, Price added.

These developments could lead to increased borrowing, so short term lenders may want to prepare for more business in the near future. As people become more secure with their jobs, they may increase consumer spending, potentially leading to a greater need for borrowing.