Unemployment Rate Falls to 17-Year Low - US Adds 164000 Jobs

Posted May 06, 2018

The Labor Department's closely watched employment report on Friday also showed wages barely rose last month, which could ease concerns that inflation pressures are rapidly building up, likely keeping the Federal Reserve on a gradual path of monetary policy tightening. The official jobs tally initially showed an increase of an upwardly revised 135,000 in March. That's the 91st consecutive month of jobs gains - a streak never seen before.

That may explain why the pace of job growth was slower in March and April: There are not enough unemployed people to fill openings. Many employers have said how hard it is to find qualified workers.

The U.S. unemployment rate has dropped two-tenths of a point to 3.9%.

- Scott Paul of the Alliance for American Manufacturing called the month's manufacturing jobs data "great", and said fears of jobs lost to tariffs haven't come true.

But 236,000 people left the labor force in April. The unemployment rate for adult women fell to 3.5 percent, its lowest level in more than 17 years.

"It's a Groundhog Day kind of employment report", said Michael Gapen, chief USA economist at Barclays PLC, referring to the film where actor Bill Murray's character must relive the same day over and over.

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"I don't think this report changes anything with the Fed", said Harm Bandholz, chief USA economist at UniCredit Bank AG.

As the US economy continues to improve at an unexpected pace, Americans are spending their biweekly checks on $62-a-barrel crude oil, screenings of "Avengers: Infinity Wars", downloads of Drake's "God's Plan", and 13.5 million new PCs a quarter. But if you look at the average hourly earnings for production and nonsupervisory workers - the only numbers we have that go back to the last time unemployment was this low - you see a different story right now: stagnant wage growth no matter how low unemployment is.

Frick believes unemployment will keep falling as businesses offer more attractive wages and benefits to entice Americans who have stopped looking for work. The Employment Cost Index (ECI), widely viewed by policymakers and economists as one of the better measures of labor market slack, increased solidly in the first quarter.

"There's what appears to be hesitancy on the part of employers to raise wages", Cathy Barrera, chief economist for ZipRecruiter, told MoneyWatch Thursday.

The black unemployment rate in both February and March was 6.9%. The unemployment rate fell after having held at 4.1 percent for the prior six months largely because fewer people were searching for jobs.

Sluggish wage growth and a slowdown in hiring threaten to undercut the Trump administration's argument that its $1.5 trillion income tax cut package, which came into effect in January and is highlighted by a sharp drop in the corporate income tax rate, would boost wages and hiring.

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