Washington, May 4 (AFP) The US unemployment rate dropped to a fresh 17-year low in April as steady hiring persisted and the labor market continued to tighten in the world's largest economy, the government reported today.

Employers added a net 164,000 new positions for the month, fewer than analysts were expecting, according to the Labor Department.

The unemployment rate fell to 3.9 percent, the lowest since December 2000. The rate for African Americans fell to 6.6 percent, the lowest level on record.

The drop in the unemployment rate, which had held steady for six months, was sure to be hailed by the White House, which has taken credit for the robust health of US economy.

But after weak hiring in March, April also underperformed, as economists had forecast a gain of 190,000 new jobs.

And the sudden fall in the jobless rate means the total size of the labor force in not increasing, which is likely to make it harder to find workers and could drive up inflation.

Employers nationwide report the pool of available workers is drying up, forcing many to raise wages to attract qualified candidates.

The April jobs report, however, showed only modest wage pressures, with average hourly earnings up only 0.2 percent for the month, in line with analyst expectations.

Meanwhile the labor force participation rate fell to its lowest level since January, accounting for some of the drop in unemployment as people bowed out of the job hunt.

The Federal Reserve this week signaled it would not overreact to an uptick in inflation but could face mounting pressure to act in the coming year, a prospect that has left markets on edge since February. (AFP) CPS

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