Unemployment Drops To 3.9%, Lowest In 17 Years

Unemployment Drops To 3.9%, Lowest In 17 Years

Job growth continued to cool in April and wage gains were minimal, but the unemployment rate fell to an 18-year low, the U.S. Department of Labor reported.

United States job growth increased less than expected in April and the unemployment rate dropped to near a 17-year low of 3.9 per cent as some jobless Americans left the labor force.

Job growth is levelling as the labour market hits full employment but economists still expect the unemployment rate will drop a bit more to 3.5 percent by the end of the year.

Non-farm employment rose by 164,000 jobs after an upwardly revised 135,000 in March, according to the Bureau of Labor Statistics.

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Many employers though are struggling to find qualified workers in this tight labor market. The number of discouraged workers was 408,000, a decrease of 47,000 from a year earlier.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 5.0 million in April. Average hourly earnings inched up just 4 cents in April and rose a very modest 2.6% over the past year.

In the past three months the USA has added an average of roughly 208,000 jobs.

The BLS report also found that average wages increased by four cents and now sit at $26.84 for the month of April. The sharpness of the drop last month is due largely to people leaving the labor force.

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Unemployment in the USA hit a post Great Recession landmark, according to figures released Friday, while a separate report showed increased factory orders but declining capital investment for new factory equipment. That is the highest level of manufacturing employment since December 2008.

Wholesaler and government were the only sectors to shed jobs. The narrow spread between long-term and short-term interest rates may reflect concerns that the Fed will hike rates too much in the near term as the economy gets a boost from tax-cut and spending stimulus, leading to an economic letdown. "It means borrowing costs will be moving higher for typical consumers". The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population. "Job gains occurred in professional and business services, manufacturing, health care, and mining".

All this said, the 0.2 percent decline in America's unemployment rate between March and April isn't unambiguously good news.

- "The April employment report delivered a downside surprise for payrolls and threw a wrench into the recent wage momentum story". They also expected to see the unemployment level drop slightly. The Federal Reserve this week signaled it would not overreact to an uptick in inflation but it could face mounting pressure to act more aggressively in the coming year.

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