WASHINGTON (Reuters) - U.S. labor force growth is set to slow further over the next decade as more Americans retire, which will confine the economy to a moderate growth path, according to government report on Tuesday.
In its biennial employment projections for 2014-2024, the Labor Department forecast the work-age population increasing at an annual rate of 0.5 percent, reaching 163.8 million in 2024.
That compares to a 0.6 percent pace of increase between 2004-2014 and is a further slowdown from a 1.2 percent rate in the 10 years through 2004.
Labor force participation was forecast to decline to 60.9 percent in 2024 from 62.9 percent in 2014. This slowdown “is expected, in turn, to lead to gross domestic product growth of 2.2 percent annually over the decade,” the department said. It said this should generate 9.8 million new jobs, “a 6.5-percent increase between 2014 and 2024.”
The labor force participation rate, or share of working-age Americans who are employed or looking for work, is currently near a near 38-year low of 62.5 percent. Shrinkage in labor force participation has accounted for the bulk of the drop the unemployment rate from a peak of 10 percent in October 2009 to the current 7-1/2-year low of 5.0 percent.
The Labor Department projected a 5.2 percent unemployment rate in 2024 and labor productivity growth of 1.8 percent annually between 2014 and 2024.
Services industries are projected to account for 94.6 percent of all jobs added between 2014 and 2024. Of these 9.3 million new service industry jobs, 3.8 million will in the
healthcare and social assistance sector.
“The healthcare and social assistance major sector is expected to become the largest employing major sector during the projections decade, overtaking the state and local government major sector and the professional and business services major sector,” the department said.
Medical services are forecast accounting for 18.0 percent of consumption in 2014, up from 16.7 percent in 2014 and 15.0 percent in 2004.
Construction is projected to add 790,400 jobs by 2024.
“Even with these additional jobs, employment in the construction major sector is not projected to return to the 2006 peak,” the department said.
Manufacturing employment is expected to fall at a 0.7 percent rate annually between 2014-2024, a more moderate annual decline than the 1.6 percent rate in the prior decade.
Production and farming, fishing, and forestry occupations are projected to shed 339,300 jobs during this period.
Reporting by Lucia Mutikani; Editing by David Gregorio