The US is on course for its first interest rate increase in nine years later this month following a strong employment report.
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The Department of Labor announced this morning that employers added 211,000 jobs in November.
But Yellen cautioned that they would not be swayed by any single economic report and instead would look at the jobs data in the context of underlying trends.
Yellen also said the economy needs a net gain of about 100,000 jobs to accommodate new entrants to the economy, and the new jobs have been created at a faster rate than that for some time.
In an unexpectedly strong month for job growth, construction firms added 46,000 jobs, the most in two years.
Fed funds futures contracts imply a 79-percent chance that the Fed will end seven years of near-zero interest rates when it wraps up its December meeting and about even odds of a second rate hike by March.
“I anticipate continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment, further reductions in the remaining margins of labor market slack, and a rise in inflation to our 2 percent objective.”
Year over year, average hourly earnings gains slowed by two-tenths of a percent to 2.3%.
Nonfarm payrolls rose 211,000 last month, the U.S. Labor Department said on Friday. That lowered the year-on-year reading to 2.3 percent from 2.5 percent in October. But as the economy has gradually improved since the Great Recession ended 6½ years ago, the need to keep borrowing rates at emergency-level lows has subsided. The Fed has said it won’t raise rates until it is “confident” inflation is moving upward toward its goal.
Last month the foreign-born population had an unemployment rate of 4.4 percent and a labor force participation rate of 66.1 percent. That was enough to offset another contraction in the mining sector – which in November shed 11,000 jobs, hemorrhaging that is the result of sustained low oil prices. It is important to point towards the fact that job gains were broad based across the economy in November, which is being seen as positive.
Investors cheered the jobs report, with the Dow Jones industrial average jumping almost 250 points in midday trading. The median forecast called for a 200,000 advance.
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“The U.S. economy seems to be steady, and that’s good because that means we have to hire more”, Tyagarajan said. Pay increases have averaged a sluggish 2% for most of the recovery but economists are expecting an acceleration in the months ahead as employers boost pay to compete for fewer available workers in a tightening labor market.
