This morning’s jobs report from the Labor Department showed the addition of 148,000 jobs to non-farm payrolls during the month of December — fewer than the 190,000 predicted by economists. The unemployment rate remained steady for the third month at 4.1 percent, the lowest level since 2000.
“It’s a little soft across the board but overall, when you’re this close to full employment, I think it’s reasonable to see some slowdown in job gains,” Jeremy Schwartz, a U.S. economist at Credit Suisse, tells Bloomberg. “This year we should probably expect to see some slowdowns in job gains — it’s just harder to add jobs when there’s a smaller pool to choose from.”
How Low Can Unemployment Go?
Some economists are predicting that the unemployment rate could drop as low as 3.5 percent in the wake of tax cuts. Theoretically, this should put pressure on businesses to raise wages, which have remained sluggish post-recession.
However, the Associated Press’s Christopher Rugaber notes that there are already a near-record 6 million job openings currently unfilled, and yet wages have not grown as expected.
“For at least two years, economists have been expecting the falling unemployment rate to boost wages,” he writes. “Though average hourly pay growth has picked up a bit, it remains about 1 percentage point below the 3.5 percent annual gain that typically occurs in a healthy economy.”
During December, average hourly earnings for private-sector employees rose by 9 cents to $26.63. The PayScale Index shows that real wages — the value of worker pay with inflation taken into account — have declined 6.9 percent since 2006.
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Where Jobs Are Growing
Several industries added jobs last month, including healthcare (31,000 jobs), construction (30,000 jobs) and manufacturing (25,000 jobs). Professional and business services added 19,000 jobs, less than the 2017 monthly average of 44,000 jobs.
Retail shed 20,000 jobs in December, while other industries remained essentially flat, including wholesale trade, transportation and warehousing, information, mining, financial activities and government.
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