Thursday, 19 July, 2018

Jobless Rate Sinks To 3.9% But Weak Wage Growth Saves Dow Jones

Unemployment drops, but wage growth remains sluggish Unemployment Rate Falls to 3.9 Percent
Lindsey Cook | 06 May, 2018, 00:00

Here are some early comments from economists about the April jobs report, which showed the USA adding 164,000 jobs and unemployment falling to 3.9% - the first time the jobless rate has dropped below 4% since the end of 2000.

Job growth amounted to a decent 164,000 last month, up from an upwardly revised 135,000 in March, the Labor Department said Friday.

The drop of two-tenths of a percentage point in the unemployment rate from 4.1 percent in March pushed it to a level last seen in December 2000 and within striking distance of the Fed's forecast of 3.8 percent by the end of this year. And the contraction in America's labor force will put limits on growth - and fiscal pressure on Social Security - unless we start implementing policies that make having children less hard for America's young people, and that allow more prime-age workers to enter the country through immigration.

The Bureau of Labor Statistics (BLS) releases a monthly report which breaks down labor market trends like employment growth. Employers nationwide report the pool of available workers is drying up, forcing many to raise wages to attract qualified candidates, which raises concerns about inflation.

Along those lines, average weekly earnings for production and nonsupervisory employees in the manufacturing sector rose from $901.39 in March to $907.78 in April.

In a sign that employers are having a hard time finding qualified workers, average hourly earnings rose 2.6 percent from a year ago. Over the three months through April, job gains have averaged 208,000 per month. Over the year so far, nonfarm hourly wages have increased by 67 cents, according to BLS. The number of unemployed people dipped to 6.3 million.

The mining sector added 8,000 jobs, extending its gains.

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Yet the very sluggishness of the economic expansion helps explain why it's now the second-longest on record and why more of the country might soon benefit from higher pay. "It means borrowing costs will be moving higher for typical consumers".

The largest jobs increase in April was in professional and business services, 54,000 jobs, followed by manufacturing and health care at 24,000 jobs each, according to the May 4 report.

Among the major worker groups, the unemployment rate for adult women decreased to 3.5 percent in April.

The overall recent surge of job gains may reflect, in part, confidence among some businesses that the Trump administration's tax cuts will accelerate growth - even though a growing roster of economic experts disagree with that assumption. Leisure and hospitality employers added 18,000 jobs last month. Eight years ago, the jobless rate was 10 percent.

Policymakers at the Federal Reserve, the U.S. central bank, watch the... Expectations are that the central bankers will hike interest rates three more times this year.

While cold weather in March and April probably held back job growth, hiring is moderating as the labour market hits full employment.

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