U.S. Job Growth Softens, Performs Below Expectations

Jobs in the U.S. grew by 148,000 in December 2017 according to the latest data released by the U.S Department of Labor on Friday. The report said the job growth totaled 2.1 million in 2017, compared with a gain of 2.2 million in 2016.

According to the report, construction added 30,000 jobs in December, with specialty trade  contractors adding 24,000 jobs and accounting for most of the gain in the sector. Construction employment rose by 210,000 in 2017, compared with its 2016 gain of 155,000.

Retail was one of the most affected sectors recording a drop of 20,000 jobs. The report said that within the industry, employment declined by 27,000 in general merchandise stores and that in 2017, employment in this sector edged down by 67000 following a gain of 203,000 in 2016.

Unemployment rates though remained stable at 4.1 percent for the third consecutive month, following declines earlier in 2017. “The number of unemployed people, at 6.6 million, was essentially unchanged over the month but was down by 926,000 over the year,” according to a statement by William J Wiatrowski, Acting Commissioner at the Bureau of Labor Statistics.

However, analysts on the whole felt that the labor market ended 2017 without much fanfare especially when it came to wages, with annual wage growth coming in near the lower end of the 2.4 percent to 2.8 percent range witnessed throughout the year.

“The lack of wage acceleration should support gradual monetary policy normalization. However, we anticipate a pickup in wage growth this year, which could lead to a rise in the working-age labor force participation rate. One bright spot we saw in the report is the biggest monthly rise in residential construction employment in 2017, raising hopes for some supply relief for housing this year,” said Doug Duncan, Chief Economist at Fannie Mae.

According to Tendayi Kapfidze, Chief Economist at LendingTree, wage growth remained weak relative to home prices and even though construction productivity might be a challenge, more construction is on the way.

“Residential construction jobs rose to the highest since 2008 as builders work to add supply given the tight inventory and rising home prices. Residential construction payrolls are at the same level as 2002, yet we have 500,000 less housing starts. The same number of employees are seemingly producing far less homes,” Tendayi said.