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US employers add modest 148,000 jobs
January 06, 2018
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WASHINGTON: US employers added 148,000 jobs in December, a modest gain but still enough to suggest that the economy entered the new year with solid momentum.

The unemployment rate remained 4.1 per cent for a third straight month, the lowest level since 2000, the Labour Department said on Friday.

For all of 2017, employers added nearly 2.1 million jobs, enough to lower the unemployment rate from 4.7 per cent a year ago. Still, average job gains have slowed to 171,000 this year from a peak of 250,000 in 2014. That typically happens when the unemployment falls to ultra-low levels and fewer people are available to be hired.

While modest, the job gains underscore the economy’s continued health in its ninth year of recovery. The unemployment rate for African-Americans dropped to a record low of 6.8 per cent.

Solid economic growth in both the United States and major countries overseas is supporting more hiring. Factory managers received the most new orders in December than in any month since 2004. Retailers have reported strong holiday sales. Builders are ramping up home construction to meet growing demand.

Sales of existing homes reached their fastest pace in nearly 11 years in November. Consumer confidence is at nearly a 17-year high. And the Dow Jones industrial average reached 25,000 for the first time on Thursday.

Most economists expect the Trump administration’s tax cuts to help speed the economy’s already decent pace of growth. Some envision the unemployment rate dropping as low as 3.5 per cent by the end of 2018. A rate that low would mark the lowest such level in nearly a half-century, and it would likely force businesses to accelerate pay raises to attract and retain employees. Pay raises have remained puzzlingly sluggish for many US workers despite the robust job market.

Some businesses, though, are already howling that they can’t find enough qualified people. There are roughly 6 million available jobs, near a record high, according to government data. Should unemployment fall to 3.5 per cent, those complaints will intensify.

For at least two years, economists have been expecting the falling unemployment rate to boost wages. Though average hourly pay growth has picked up a bit, it remains about 1 percentage point below the 3.5 per cent annual gain that typically occurs in a healthy economy.

Economists point to several trends that may be keeping a lid on wage gains. As the vast baby boom generation ages - 10,000 of them are turning 65 every day - they are retiring and are being replaced by younger workers, who typically earn far less money. That is likely suppressing overall wage growth, economists say.

Worker pay also depends on productivity, or how efficient employees are. And productivity has been weak for roughly a decade.

Agencies

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