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Friday, May 7, 1999 Published at 19:16 GMT 20:16 UK


Business: The Economy

US jobs galore



The American economy shows no signs of slowing down.

In April it created another 234,000 jobs.

Unemployment in the United States is now at an historic low of 4.3%.

In the first quarter of 1999, the economy grew at an annual rate of 4.5% - far faster than most other industrial countries.


[ image: Greenspan: warned of tight labour markets]
Greenspan: warned of tight labour markets
Since the boom started seven years ago, the US economy has created some 15 million jobs.

The retail sector created the most jobs, while there was still a net loss of manufacturing jobs.

The figures, although strong, were not as strong as feared by the markets, which boosted bonds and stock futures.

The markets are worried that if the US boom continues to accelerate, interest rates will be raised, weakening share and bond prices.

The fact that job growth in March was revised downwards, to only 7,000, also reassured traders.

"We do have a healthy economy but today's report shows it's not overheating ... The economy is strong and quite healthy, there's still a benign inflation environment on many fronts, said Gary Thayer of AG Edwards & Sons.

No signs of inflation

The strong job growth has not led to inflationary pressures as yet.

Wages are still growing at only 3.2% a year - and the rate is slowing down. In April hourly wages only grew by 0.2%, the slowest rate for three years.

Some economists argue that the growth in productivity - the amount each worker can produce per hour - has allowed the economy to keep growing without inflation.

The tightening labour market does worry many analysts, however, who fear it may eventually lead to inflation.

On Wednesday Alan Greenspan, the influential chairman of the Federal Reserve, America's central bank, said that the labour shortages were the main threat to the continuation of the boom.

"There is very little in this report that would change Mr Greenspan's view that we have a shallow pool of workers and that the risks of higher inflation are still there," said Oscar Gonzalez, an economist at John Hancock Mutual Life in Boston.





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