Economy

U.S. job gains disappoint, unemployment holds at 4.1%

U.S. job gains disappoint, unemployment holds at 4.1%”

Retail payrolls fell by 20,300 in December, the largest drop since March, despite a strong Christmas shopping season. However, in the same months, job growth surged after being held back in September by back-to-back hurricanes.

Many firms have reported the need to raise wages to attract new workers, and that was reflected in the increase in average hourly earnings to $26.63 from $26.54 in the prior month, and from $25.98 at the end of 2016.

Employment rose almost 2.1 million last year, slightly slower than 2016, President Barack Obama's final year in office.

While this is the lowest rate for black individuals, the rate is still higher than the unemployment rate for all Americans, which remained steady at 4.1 percent in December.

As we turn our attention to 2018, this month's employment numbers beg the question as to whether the weakness in the report is due to choppiness from month-to-month, or the beginning of a reversion to slower growth in the economy.

But how the Republican tax package, which lowered the corporate tax rate from 35% to 21%, will influence the economy over the next 12 months remains to be seen.

There are concerns the economy could overheat.

The economy needs to create 75,000 to 100,000 jobs a month to keep up with growth in the working-age population.

Some economists are predicting unemployment will fall to 3.5% by the end of 2018.

The economic sectors that most drove total nonfarm employment growth in December (on a seasonally adjusted basis) include construction (+30,000), healthcare and social assistance (+29,200) and leisure and hospitality (+29,000).

Manufacturing gained 196,000 jobs in 2017, making it the third-best year for new factory jobs since the Great Recession, according to Scott Paul, president of the Alliance for American Manufacturing.

There was no change in the unemployment rate, which declined by seven-tenths of a percentage point past year.

That could potentially unleash a faster pace of wage growth and translate into a much stronger increase in inflation than now anticipated.

That, according to economists, would force the Fed to push through four interest rate increases this year instead of the three it has pencilled in.

The ADP report issued January 3 said that nonfarm employment increased by 250,000 jobs in December 2017.

ADP reported private sector employment increased by 250,000 jobs in December. Health care continued to lead the pack, adding 300,000 jobs in 2017.

"As a comparison, couriers & messengers added only 2,100 jobs, so in net terms the structural shift is hardly positive for employment", said Paul Ashworth, Chief US Economist at Capital Economics.

Total nonfarm payroll employment rose by 148,000 in December.



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