Unemployment rate hits 3.9 percent, lowest since 2000

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USA job growth increased less than expected in April and the unemployment rate dropped to near a 17-1/2-year low of 3.9 percent as some out-of-work Americans left the labour force.

The U.S. unemployment rate has dropped two-tenths of a point to 3.9%.

"A faster pace of wage growth would be great for households, but in a way that would create even more difficulty for policymakers", Ms. Zentner said. The deceleration in wage growth was more surprising to us, especially given such signs of labor market tightness. The 10-year Treasury yield TMUBMUSD10Y, -0.15% were little changed at 2.94%.

Average year-over-year hourly and weekly earnings for all USA workers in April were +2.6% and +2.9% respectively. Some analysts warn that wage growth in the U.S. remains relatively weak, suggesting that the USA labor market may be less healthy than it appears.

In the past three months the U.S. has added an average of roughly 208,000 jobs.

In April, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.84. "Still, the potential for labor-force participation to increase as workers re-enter the workforce provides some additional supply that isn't necessarily apparent in the unemployment rate". The smaller pool of available workers usually leads to increased wages because companies have to compete to hire people. This is the lowest number since 2000. As the BLS said, "Over the past 12 months, the industry has added 518,000 jobs".

Despite the numbers, last month's growth paled in comparison with the average monthly gain of 191,000 jobs over the past year.

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Hiring also rose smartly among health-care providers and manufacturers, each of which added 24,000 jobs.

Big picture: After nearly nine years of economic expansion, one of the biggest problems companies face is finding skilled workers to fill millions of job openings.

The US unemployment rate dipped to 3.9% in April, after hovering at 4.1% for the last six months.

Fed economists have been calling for the unemployment rate to fall to 3.8% by the end of 2018, and at this rate they could be proven right.

Low unemployment also means higher wages as the employers are under less economic pressure and it means they can hike wages sharply to retain employees. That's just slightly below the 68-year average of 63 percent. "Compensation has become a major issue for many employers, given the current economic climate and competitive market". That number was revised to a gain of 135,000 jobs in today's report.

Investors breathed a sigh of relief, as while the headline number was better than expected, results overall were more of a mixed bag, which suggests the Federal Reserve may not rush to raise interest rates after all.