The U.S. unemployment rate remained unchanged at 5 percent and the economy created 211,000 jobs in November, a healthy result that further increases the likelihood of an interest rate hike later this month.
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Federal Reserve Chair Janet Yellen, speaking the day before a key employment report, said the US economy needs to add fewer than 100,000 jobs a month to cover new entrants to the workforce, setting an implicit floor for the jobs growth policymakers want to see.
The November jobs report is out, and it’s meeting what were moderately high expectations. Some 46,000 jobs were created in businesses with one to 19 employees, and another 35,000 jobs were created in businesses with 20 to 49 employees. And she has cited the labor market’s cumulative progress in recent years, with the unemployment rate down to 5% from 10% in 2009, and employers adding an average of more than 200,000 jobs a month in 2015. Labor market strength is an important consideration for the U.S. central bank over whether to move interest rates. Most economists have forecast that it will grow at a still relatively subpar 2.5 percent this year, only slightly above its average pace since the recession officially ended in mid-2009.
Most economists say that the labor market has been the strongest element of the US economy, even though wages have been slow to rise. Employers have added a robust average of 237,000 jobs a month over the past 12 months.
The Labor Department report showed strong hiring in a broad range of industries, including construction, retail trade, finance and business services.
Other labor market measures that Fed officials are eyeing as they consider lifting the benchmark overnight interest rate from near zero are expected to have held steady last month.
The healthcare sector added nearly 24,000 jobs, and retailers gearing up for the holidays added nearly 31,000.
“Raising rates this year will, in my view, serve to reduce monetary policy uncertainty and to keep the economy on track for sustained growth with price stability”, Harker said.
Fed fund futures were pricing in a 79 percent chance of a rate increase when the FOMC meets December 15-16.
The only real laggards last month were the manufacturing sector, hammered by the strong US dollar (which makes USA goods more expensive) and mining.
“The Fed will raise rates in December and data are now being watched primarily to determine how quickly rates rise next year and beyond”, echoed Chris Low, economist at FTN Financial. The labor force participation rate – the percentage of Americans holding down or seeking a job – is at a historically low level and has fallen steadily for years.
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Oilfield services provider Schlumberger this week announced another round of job cuts in addition to 20,000 layoffs already reported this year.
