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Economic Forecasts

Strong Jobs Growth Continues

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 160K/month in '17 More »
Interest rates 10-year T-notes at 3% by end '17 More »
Inflation 2.4% in '17, up from 2.1% in '16 More »
Business spending Rising 3%-4% in ’17, after flat ’16 More »
Energy Crude oil trading from $55 to $60 per barrel in May More »
Housing Single-family starts up 9% in '16, 11% in '17 More »
Retail sales Growing 3.9% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, after nearly flat '16 More »

Employment in January surged unexpectedly, with 227,000 jobs added. While it’s unlikely that this torrid pace will continue, the surprisingly strong reading is a sign of strength for the broader economy, which we expect to grow a little faster in 2017 (2.1%) than in 2016 (1.6%). It also means that the economy will be strong enough this year for the Federal Reserve to continue raising interest rates.

Jobs were added across the spectrum in January, with strong growth in health care, business services, retail, food services and construction. As a bonus, even the mining and durable-goods manufacturing sectors added jobs for the third month in a row, after a long period of weakness last year.

See Also: All Our Economic Outlooks

Look for the job market to continue tightening this year as demand for skilled workers exceeds their availability. Employment growth in 2017 will slow to an average of 160,000 jobs per month from 180,000 monthly in 2016, but the unemployment rate will edge down further to 4.5%. The four-week average of initial unemployment claims is still close to its lowest level since 1973, keeping the inflow of newly unemployed at a low level.

It’s a positive sign that the unemployment rate ticked up to 4.8% last month. More folks outside the labor force came back in to look for work, and so were newly classified as unemployed. But the fact that they are looking suggests more optimism about the economy.

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Wage gains slowed to a 2.5% growth rate in January. The measure of wages in the employment report tends to be volatile, however, and fluctuations should be expected. Wages will continue to grow at a faster rate this year than last, given the tightness of the labor market.

SEE ALSO: The Best Jobs for the Future

Source: Department of Labor, Employment Data