Nonfarm payroll increases averaged 210,000 a month between January and November, above the 200,000 level indicating healthy growth. And the government revised up its estimated job growth for September and October by a combined 35,000.
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The U.S. economy delivered another month of sturdy job growth in November, clearing a path for the Federal Reserve to end later this month an extraordinary seven-year run of near-zero interest rates. The state’s unemployment rate fell to the lowest level in more than 14 years at 4.4 percent. “A December rate hike now looks to be in the bag”.
The U.S. Federal Reserve risks losing its credibility and only adds uncertainty to the economic landscape the longer it takes to normalize policy, he said in prepared welcome remarks before “The New Normal for the U.S. Economy” forum hosted by the Philadelphia Fed.
In all, the data from the Labor Department shows an economy growing at a steady pace even if the increase in gains remained subdued due to many Americans still not working or are in part time work because there are not full time positions for them.
The Fed has left its target for the federal funds rate, the interest that banks charge on overnight loans, near zero since December 2008.
The policy implication that will attract the most attention in markets and beyond is that it is now nearly certain the Fed will raise interest rates this month. Economists expect a more delayed impact on new mortgages that are usually pegged to U.S. Treasury bills, whose price already reflects expected interest rate hikes.
Yet solid consumer spending and the housing recovery have underpinned payroll gains, more than offsetting industrial output that’s been curtailed by a strong dollar that has hobbled exports and bolstered imports. That is below October’s annual increase, which had been the strongest in six years.
“Payroll gains were despite continued weakness in manufacturing and energy sectors, suggesting little spillover into the rest of the economy”, said Samuel Coffin, an economist at UBS in Stamford, Connecticut. Hopefully, most of the part-time jobs created in November were a symptom of the holiday season, or a one-month statistical anomaly, and not an omen of future job growth.
There’s one last thing to note in November’s jobs report that doesn’t seem to be getting much attention. In November, the government said wages rose 0.2 percent, leaving the 12-month increase in average hourly earnings at 2.3 percent.
And sales of existing homes have increased nearly 4 percent from a year ago, while new home purchases have jumped almost 16 percent.
Also, the average work week slipped to 34.5 hours from 34.6 hours, perhaps signaling that demand for employees could moderate in coming months.
Unemployment rates remain at a 7 1/2 year low, holding steady at 5%. Unemployment has fallen from a peak of 10% down to 5%, and even wages are finally starting to go up. Nevertheless, they are not counted as unemployed because they had not searched for work in the last four weeks of the survey period.
Businesses added 197,000 jobs., driven by construction, professional technical and services, and health care.
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That comes despite a strong contraction in the mining industry, due to the plunge in oil prices, where jobs continue to bleed, down 123,000 since December. Average monthly job creation for this year so far is now 210,000, substantially less than the average for 2014 of 260,000. The company said it expected the slowdown in drilling activity to continue in 2016. That pushed up a broader measure of unemployment – that includes those workers, the unemployed as well as discouraged Americans who have stopped looking for jobs – to 9.9% from 9.8%.
