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Economic Forecasts

Job Creation Bounces Back

Kiplinger's latest forecast on jobs

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GDP 2.1% growth in ’17, following 1.6% in ’16 More »
Jobs Hiring pace should slow to 175K/month in '17 More »
Interest rates 10-year T-notes at 2.7% by end '17 More »
Inflation 2.1% in '17, same as in '16 More »
Business spending Rising 3%-4% in ’17, after flat ’16 More »
Energy Crude trading from $47.50 to $52.50 per barrel in August More »
Housing 6% price growth by end of '17 More »
Retail sales Growing 3.8% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, after nearly flat '16 More »

Employment growth recovered in April, with 211,000 jobs created after only 79,000 in March. An East Coast blizzard during the March survey week had held down job growth, setting April up for a rebound. Still, we expect job creation during the rest of this year to slow to 175,000 each month because as the labor market tightens, it becomes harder for employers to find suitable candidates.

The unemployment rate dropped to 4.4%, the lowest since 2007. It will likely end the year at 4.3% and drop further next year, nearing 4%.

Other signs of labor market tightening: The number of long-term unemployed individuals declined, along with the number of people working part-time who want to work full-time. The underemployed and unemployed together totaled 8.6% of the labor force. That’s still above the 2007 low of 8%, but a far cry from the peak of 17.1% in early 2010.

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Most industries added jobs in April, including the stalwarts of health care, restaurants, and business and professional services. Retailers added jobs after two months of large cutbacks, but traditional retail chains are likely to see only slow employment gains this year.

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Wage gains for nonsupervisory workers stayed at a 2.3% growth rate in April. Nonsupervisory workers make up four-fifths of the workforce, so their pay increases are more likely to be reflected in prices and consumer spending. We expect wage growth to be closer to 3% by the end of the year, as the labor market tightens and employers are forced to pay more to secure enough workers.

See Also: The Best Jobs for the Future

Source: Department of Labor, Employment Data