The U.S. economy will continue to generate about 175,000 to 200,000 jobs per month, reflecting moderation in overall hiring after the release of pent-up demand during the past few years. The composition of hiring should remain slightly tilted toward higher-paying jobs.
Meanwhile, the labor market is tightening with only about 1.43 unemployed persons available for each job opening. This indicates firms are facing challenges finding skilled and semi-skilled workers. It also implies wages and salaries will likely accelerate above 3 percent in the near term.
We expect a decline in the unemployment rate to 4.7 percent by the end of 2016 with risk of a lower unemployment rate as the economy moves past full employment. This poses a risk of escalating wage demands next year.
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