US job growth cools as labor market nears full employment; wages up

Andrew Cummings
January 8, 2018

However, lower-paid and less-educated workers are finally making gains after not seeing much improvement in the past few years, with unemployment ticking down slightly for those with only a high school degree, to 4.2 percent.

Last month, blue collar hiring showed solid gains: Manufacturing and construction added 25,000 and 30,000 jobs, respectively.

Employers added 148,000 workers, compared with the 190,000 median estimate of economists surveyed by Bloomberg, held back by a drop in retail positions, a Labor Department report showed Friday.

Hiring by USA employers slowed a bit as 2017 ended and pay growth was sluggish. West Virginia, where mining jobs have faded in recent decades, still has one of the highest jobless rates in the country (5.3 percent), and OH, which was hit hard by the manufacturing downturn, continues to grapple with a higher-than-average share of unemployed people (4.8 percent).


Economists expect job growth this year to slow to well below the 2017 monthly average of 170,000 as the labour market hits full employment, which will likely boost wage growth as employers compete for workers.

"The people with less education in the past year or two have made the biggest gains in the labor market", said Jed Kolko, chief economist of Indeed.com, a job-posting site. Average hourly earnings rose 2.5 percent in December from a year earlier - about a full percentage point lower than is typical in a healthy economy.

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

The decline in retail reflected job losses at department and general-merchandise stores. Some envision the unemployment rate dropping as low as 3.5 percent by the end of 2018. That, according to economists, would force the Fed to push through four interest rate increases this year instead of the three it has penciled in. Macy´s Inc said last month it would hire an additional 7,000 temporary workers for its stores to deal with heavy customer traffic in the run-up to the holiday shopping season.


The headline numbers suggest that the jobs market remains strong. "I don't see that changing". Economists are optimistic that annual wage growth will top 3.0 per cent by the end of this year.

In Chicago, the chain took longer to staff up for its first restaurant, in order to find the right candidates.

Also helping gold prices is continued stagnant growth in wages.

While economists differ on the likelihood and strength of any impact corporate tax cuts might have on hiring, Hamrick said the performance of smaller businesses could experience a sort of halo effect if their larger counterparts pick up steam in the coming months.


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