Published: Sun, May 06, 2018
Finance | By Gustavo Carr

Unemployment Is Below 4 Percent for First Time Since 2000

Unemployment Is Below 4 Percent for First Time Since 2000

Counting Labor Department revisions for February and March, the economy has added an average of 208,000 jobs a month over the past three months.

The number of people with part-time jobs, but who preferred full-time jobs, totaled 5 million, about the same as the previous month. This also impacts wages in another way as the pool of available workers might not be as tight as it appears since the unemployment rate doesn't track people who have fallen out of the labor market because of long-term joblessness.

The U.S. unemployment rate dipped below 4 percent for the first time in 17 years, but other details of the April jobs report kept any celebration in check.

In all, the number of people receiving aid dropped 77,000 to 1.26 million after April 21. And the labour force participation rate fell to its lowest level since January, accounting for some of the drop in unemployment as people bowed out of the job hunt. However, hiring in April fell short of the projected 192,000 jobs added, according to economists surveyed by Reuters.

After the jobs data, the 10-year Treasury yield eased to 2.935% while the 2-year yield, which more closely tracks Fed rate expectations, held around 2.49%. The jobless rates for adult men (3.7 percent), teenagers (12.9 percent), Whites (3.6 percent), Blacks (6.6 percent), Asians (2.8 percent), and Hispanics (4.8 percent) showed little or no change over the month. Omitting bosses, "hard hat" workers realized year-over-year hourly and weekly earnings gains of +3.9% and +4.7%.

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Economists interpreted symmetric to mean policymakers would not be too anxious with inflation overshooting the target. An acceleration could force Fed officials to raise rates more aggressively, which would raise the cost of vehicle loans and credit card debt. Some envision the unemployment rate dropping as low as 3.5 percent by the end of 2018.

"Factory orders have climbed in seven of the past eight months, and equipment spending, as reported in the gross domestic product report, has been supportive of topline growth in each of the past six quarters", said Tim Quinlan, senior economist at Wells Fargo Securities. If the unemployment rate is below this number, the economy is at full employment, businesses can not easily find workers, and inflation and wages typically rise.

The solid job growth is a continuation of an economy that has been growing for almost nine years, the second longest streak on record. Heavy and civil engineering jobs, however, declined by 3,400 over the month.

One sector that saw job growth was professional and business services, which got a boost of 54,000 positions. In April, 164,000 jobs were added, including gains in goods-producing industries, such as manufacturing, mining and logging, and construction.

In April, the number of private sector jobs rose by 168,000, while the number of government jobs slid by 4,000. Manufacturers added 73,000 jobs in the first quarter, much more than in the same period a year ago.

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