“The most important number to look at in upcoming employment reports is the year-over-year change in average hourly earnings”, said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, ahead of Friday’s job report. Hiring for September and October was revised higher by a combined 50,000 jobs.
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Though unemployment at 5 per cent is at or near the level many policymakers consider to be full employment, Ms. Yellen said that high levels of discouraged workers, part-time employment and other job market measures show there is still room for progress. More Americans started looking for jobs, and almost all found them.
“Ongoing gains in the labour market, coupled with my judgment that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to two percent”.
The average work week fell slightly to 34.5 hours in November, from 34.6 hours in October.
A positive jobs report for November “all but guarantees” the Federal Reserve will raise USA interest rates later this month, experts say.
UniCredit’s chief economist Harm Bandholz believes that the latest unemployment data should dispel any doubts about the incoming rate hike later this month.
The signal of economic health will likely spur the Federal Reserve to raise interest rates at its next meeting in less than two weeks.
“The Fed raised expectations (for a rate hike) at its September meeting, and didn’t follow through”, he said. Janet Yellen, the Fed chairman, said this week that payrolls growth of “under 100,000 a month” would be enough to absorb new entrants to the jobs market.
Employee pay increased at a steady pace last month.
Still, the second month of strong job gains should allay fears the economy has hit a soft patch, after reports showing tepid consumer spending in October and a slowdown in services industry growth in November. The Fed has kept its key short-term rate at a record low near zero for seven years. The mining sector, which has been pummeled by low oil prices, fell by 11,000 last month, and has fallen by 123,000 over the past year. Wage growth has been limited to about 2% a year since 2010, well below the 3% to 3.5% gains that are common at the height of a recovery.
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The Dow surged by about 370 points Friday to close at 17,847.63 in the wake of the November jobs report after dropping more than 250 points on Thursday.
