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Economic Forecasts

Hurricanes Distort September Job Numbers

Kiplinger's latest forecast on jobs

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GDP 2.1% pace in '17, 2.4% in '18 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 2.0% in '18, up from 1.6% in '17 More »
Business spending Rising 3%-4% in '17, after flat '16 More »
Energy Crude trading from $40 to $45 per barrel in December More »
Housing Existing-home sales up 1.3% in '17 More »
Retail sales Growing 3.8% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, after nearly flat '16 More »

Employment fell by 33,000 in September, the consequence of hurricanes that affected Texas, Louisiana and Florida. Food service establishments were the most affected, losing 105,000 employees. Other sectors that lost a combined 45,000 jobs were concentrated in residential areas, which were the hardest-hit in south Texas: Grocery stores, child day care, nursing homes, banks, home construction and miscellaneous services. As these businesses resume operations, reported job gains are likely to be greater than normal in October and subsequent months.

Employment growth of only 169,000 in August and 138,000 in July shows that the jobs machine that regularly spit out gains of 200,000 or more per month has likely slowed down. As the labor market tightens, it will become harder for employers to find suitable candidates. In the first part of 2018, job gains are likely to be around 175,000 per month.

Hiring in the construction and manufacturing industries will continue at its previous pace, but the big gains in service industries have likely ended, with only moderate growth expected for health care, food services and temporary help, and scant increase in retail trade.

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Job openings continue at high levels in heath care, food services, construction, and transportation and warehousing. Openings in construction are at their highest level in 10 years.

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The unemployment rate moved down to 4.2% in September. This is at or below what most economists define as full employment, but it is likely the rate will edge down a little more, to 3.9% next year.

Wage gains in September ticked up to around 2.5% for nonsupervisory workers and 2.9% for all employees, which may signal the beginning of rising wage pressures caused by a tighter labor market. However, the large drop in low-paid food service workers may be causing an artificial bump up in the pay numbers by increasing average hourly earnings. The October jobs release should tell us a lot about whether these trends are durable or not.

See Also: The Best Jobs for the Future

Source: Department of Labor, Employment Data