US unemployment hits lowest rate in a decade

Cornelia Mascio
Mag 8, 2017

After a slow March, when hiring likely was held down by a winter storm, the United States economic engine last month added an estimated 211,000 net new positions while the jobless rate fell to 4.4 percent - the lowest since May 2007. The decline reflected both an increase in hiring and people leaving the labor force.

This jobs report bolsters that interpretation, with gains across industries - even in sectors such as retail, which struggled earlier in the year, according to Gus Faucher, chief economist for PNC Financial Services.

"These developments should keep the Fed firmly on track to hike rates again in June and should motivate a hawkish shift in the interest rate forecasts they will release at that meeting", said Michael Feroli, an economist at JPMorgan in NY.

The Federal Reserve on Wednesday left its benchmark interest rates unchanged but signaled it may persist with an expected course of rate increases during the year, in large part due to strong job creation and low unemployment.

Prices of USA government debt fell after the employment data while US stock index futures rose. The reality is that since the president has taken office, the jobs survey has been conducted only two times - in February and March. Average hourly earnings rose by 2.5 percent from the previous year to $26.19, slightly slower growth than was seen in previous months.

The report signals that the overall economy is poised for stronger growth after an anemic first quarter.

Unfortunately for employees, average paychecks grew more slowly in April, increasing only 2.5 percent over the past 12 months. The unemployment rate hasn't been this low since May 2007-and that matched the lowest rate of any point during the prior expansion. That could also push up wages.

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

They appeared to back the argument that weak economic growth in the first quarter was a blip. These were concentrated in less productive, lower paying fields, with leisure and hospitality leading the way with 55,000 positions. Professional and business services payrolls rose by 39,000.

We saw a fall in key measures of unemployment, and a declining participation rate - suggesting that discouraged workers are unfortunately not re-entering the labor market. Retailers including J.C. Penney Co.

The 211,000 increase followed a 79,000 advance in March that was lower than previously estimated, a US Labour Department report showed yesterday. Other data yesterday showed a mild improvement in the trade deficit in March, which bodes well for the economy's prospects in the second quarter.

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