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Economic Forecasts

Job Growth Is Slowing

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 2.4% by end '17 More »
Inflation 1.6% in '17, down from 2.1% in '16 More »
Business spending Rising 3%-4% in ’17, after flat ’16 More »
Energy Crude trading from $40 to $45 per barrel in September More »
Housing 6% price growth by end of '17 More »
Retail sales Growing 3.5% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, after nearly flat '16 More »

Employment growth is on a more moderate path this year. As the labor market tightens, it becomes harder for employers to find suitable candidates. We expect job creation to slow to 165,000 positions each month for the rest of 2017, down from 187,000 last year.

May’s gain was a moderate 138,000, less than expected because of small job losses in several sectors, such as retail and government. Downward revisions to March and April verified our anticipated drop-off in job growth.

The retail sector is stressed, losing jobs for the fourth consecutive month. Store closures announced for 2017 will add to the losses. Areas of continued strength include the stalwarts of health care, restaurants, and professional and business services. However, restaurant hiring is likely to slow, given a drop in sales.

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The unemployment rate fell again, to 4.3%, the lowest since 2007. However, that is probably attributable to fewer people looking for jobs rather than the unemployed finding positions. The rate will likely tick up to 4.4% in June before ending the year back at 4.3%. It could drop further next year, nearing just 4%.

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A sign of labor market tightening: The number of part-time workers who would prefer to be full-time declined. Collectively, the underemployed and unemployed totaled 8.4% of the labor force. That’s still higher than 2007’s low of 8%, but a far cry from the peak of 17.1% in early 2010.

Wage gains for nonsupervisory workers in May again grew at 2.4%. Nonsupervisory workers are four-fifths of the workforce and tend to consume more of their paychecks, so prices and consumer spending tend to reflect their pay increases. We expect stronger wage growth by year’s end, as the labor market constricts and employers are forced to pad paychecks to secure enough workers.

See Also: The Best Jobs for the Future

Source: Department of Labor, Employment Data