U.S. job growth is expected to have picked up in January and wages increased further, highlighting the strong momentum in the economy at the start of the year. Nonfarm payrolls forecast is 184,000 jobs were created in January, after rising just by 148,000 in December. The unemployment rate is expected to remain unchanged at a 17-year low of 4.1%. Economists expect to see whether there is a boost to job growth from the Trump administration’s $1.5 billion tax cut package passed in December, in the biggest overhaul of the tax code in 30 years. The reduction in the corporate income tax rate comes down to 21% from 35%, where President Donald Trump and his fellow Republicans believed that it could help create more jobs and boost the economic growth. Apple and 6 other companies had announced plans to add roughly a combined 37,000 new jobs in response to the tax cuts as of the end of January. On the other end of the spectrum, the rate of the job growth is slowing as the labor market is near full employment levels. Companies are reporting difficulties finding qualified and specialized workers, which economists say will force some to significantly raise wages as they compete for scarce labor. Average hourly earnings is forecasted to have risen by 0.3% in January after a similar gain in December. That would lift the year-on-year increase in average hourly earnings to 2.6% from 2.5% in December. Annual wage growth remains below the 3% that economists believe is needed to push inflation towards the Federal Reserve’s 2% target, as optimism was reported on Wednesday by Fed officials. Policymakers, who voted to keep interest rates unchanged, described the labor market as having “continued to strengthen,” and economic activity as “rising at a solid rate.” U.S. financial markets are expecting a rate hike in March.
The 1st US Job Report in 2018
Daily Analysis - 02/02/2018