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Economic Forecasts

Jobs Growth Reflects Good Economy, Hurricane Rebuilding

Kiplinger's latest forecast on jobs

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GDP 2.6% pace in '18, up from 2.2% in '17 More »
Jobs Hiring pace should slow to 175K/month by end '17 More »
Interest rates 10-year T-notes at 2.4% by end '17 More »
Inflation 2.1% in '18, up from 1.9% in '17 More »
Business spending Rising 3%-4% in '17, after flat '16 More »
Energy Crude trading from $50 to $55 per barrel in February More »
Housing Existing-home sales up 1.3% in '17 More »
Retail sales Growing 3.8% in '17 (excluding gas) More »
Trade deficit Widening 6% in '17, after nearly flat '16 More »

November’s 228,000 new jobs indicate a growing economy and rebuilding efforts in hurricane-damaged areas. Although rebuilding accounts for roughly 35,000 of the new positions, that still leaves a large enough gain for the rest of the country to indicate continuing economic growth. Hiring is going strong in warehousing, health services and temporary help, and picked up in manufacturing, construction and retail. Manufacturing hiring has benefited from improving export prospects, but some of it is related to high levels of production in the auto industry and its suppliers. This pace is expected to ease next year as auto production flattens.

Unemployment held at 4.1% in November. Look for it to drop to 3.9% next year as it becomes harder for employers to find suitable candidates. The short-term unemployment rate (less than six months) has fallen to its lowest level in 65 years, indicating that the labor market should be really tight right now.

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Tight labor markets are also evident in high levels of job openings in construction, transportation, warehousing, health care and food services. Openings in the last two categories are at their highest level in 15 years.

But worker scarcity has not translated into strong wage gains yet. November wage gains were only 2.3% for nonsupervisory employees and 2.5% for all employees. Wage growth has been stuck around 2.5% for a couple of years. However, expect it to pick up in 2018, likely reaching 3% by the end of the year.

See Also: The Best Jobs for the Future

Source: Department of Labor, Employment Data