U.S. economy had a great start in the new year as a result of job growth and raised wages that accelerated in January.
According to a Reuters survey of economists, Nonfarm payrolls probably increased by 180,000 jobs last month, after rising 148,000 in December. The unemployment rate is forecast to stay unchanged at a 17-year low of 4.1 percent. On Friday at 08:30 am, the Labour Department will release its report on the employment status in the country.
Reuters reports that several economists said employment gains are being driven by buoyant domestic and global demand. They saw little boost to job growth from the Trump administration’s $1.5 billion tax cut package passed by the Republican-controlled U.S. Congress in December, in the biggest overhaul of the tax code in 30 years.
“I don’t think there will be much impact on job growth, in part because the economy is pretty much at full employment. The impact is going to be more on the wage/income side. We will start to see more pressure on wages,” said Robert Murphy, an associate economics professor at Boston College.
The Republican-controlled Congress with their Republican president has lowered the corporate income tax rate from 35 percent to 21 percent, hoping to create new jobs and boost the economic growth.
For now, only seven 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.
The predicted job gains in January will be below the last three months average of 204,000 new jobs. The U.S. economy will need to create up to 100,000 jobs per month in order to keep up with the growth in the working-age population.
Reuters also reported that job growth is slowing as the labor market nears full employment. Companies are increasingly reporting difficulties finding qualified workers, which economists say will force some to significantly raise wages as they compete for scarce labor.
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