US economy to have moderate growth in the next decade as more Americans retire

US labour 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 a government report on Tuesday.

In its biennial employment projections for 2014-2024, the Labour Department forecast the work-age population increasing at an annual rate of 0.5%, reaching 163.8 million in 2024.

That compares to a 0.6% pace of increase between 2004-2014 and is a further slowdown from a 1.2% rate in the 10 years through 2004.

Labour force participation was forecast to decline to 60.9% in 2024 from 62.9% in 2014. This slowdown "is expected, in turn, to lead to gross domestic product growth of 2.2% annually over the decade," the department said. It said this should generate 9.8 million new jobs, "a 6.5% increase between 2014 and 2024."

The labour 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%. Shrinkage in labour force participation has accounted for the bulk of the drop the unemployment rate from a peak of 10% in October 2009 to the current 7-1/2-year low of 5.0%.

The Labour Department projected a 5.2% unemployment rate in 2024 and labour productivity growth of 1.8% annually between 2014 and 2024.

Services industries are projected to account for 94.6% 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% of consumption in 2014, up from 16.7% in 2014 and 15.0% 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% rate annually, between 2014-2024, a more moderate annual decline than the 1.6% rate in the prior decade.

Production and farming, fishing, and forestry occupations are projected to shed 339,300 jobs during this period.