Financial Watch expects April’s job growth to come in at a moderate 160,000 jobs. This is just below the consensus estimate of 170,000 jobs. Unemployment should remain unchanged at 5.2%. April’s job report can expected to be more positive than last month’s report that showed only 110,000 jobs were created during March. The bounce expected in this coming job report would return job growth to the pattern we have been seeing over the past year.
Job growth so far during the current economic expansion has been very disappointing. Strong productivity growth has allowed employers to grow their businesses without adding many employees to their payroll. With economic growth slowing, it is unlikely a labor boom will take place in the near term. Beginning in May and continuing throughout the summer we expect job growth to slow to a level where the labor market is failing to create enough jobs to absorb the normal growth of the job seekers.
While business has been the primary beneficiaries of the economic expansion so far, eventually changes will take place to create the strongest labor market we have ever seen. The baby boomer generation is drawing ever closer to retirement. Although debated among economists, Financial Watch believes the eventual collapse of the trade deficit will fuel the creation of about 5 million jobs. It is extremely difficult to project conditions out several years, but from 2008 to 2010 we expect businesses face a labor shortage even more difficult than the 1990’s.