Revisions added 35,000 more jobs in September and October, with October’s 298,000 gain the best this year.
Advertisement
There were still weaknesses in the report: average wage gains remain slow – up just 0.16 percent from October – the ratio of working age people participating in the labor force is still historically very low, and the number of people forced to take part-time jobs increased from the previous month by 319,000.
Friday’s strong jobs report “all but guarantees” the Fed later this month will raise its benchmark short-term interest rate above zero for the first time since 2008, according to MarketWatch. She signaled that a rate increase is likely because the labor market has improved over time, with unemployment falling from 10% in 2009. Futures indicated a 100 point gain in the Dow Jones industrial average when the market opens at 9:30 a.m. ET.
The labor force participation rate, a more accurate measure of USA employment than the official unemployment rate, remained virtually static, ticking upward from the almost 40-year low of 62.4 to 62.5 percent of the population.
The labor market’s strength is evident in the data for November, which removes the final large obstacle before the decision is made by the Fed.
The temp penetration rate – temp jobs as a percent of total nonfarm jobs – slipped to 2.04% in November compared to 2.05% in October. The median forecast for the end of 2016 is for a fed funds rate of 1.125 percent, with most dealers expecting the Fed to maintain a range, rather than a specific target as it did in years past. The rate, which measures workers that are marginally attached to the market, as well as workers that are not now looking for employment, stood at 11.4% a year ago at this time.
Friday’s jobs report also highlighted Brainard’s argument that weakness in the global economy could constrain USA growth more than policymakers now anticipate. Employers have now added a robust average 213,000 jobs a month over the past six months.
Retail added a seasonally adjusted 31,000 jobs in November after October’s gain of 41,000.
Information lost 12,000 jobs over the month.
Still, Mayland cautioned that while a rate hike is expected, it’s not a done deal. The clear message from the labor market to the Fed is: ‘Just do it!’ ” said Harm Bandholz, chief US economist at UniCredit Research in NY. The college-level unemployment rate, which can serve as a proxy for professional employment, was also unchanged month over month at 2.5%.
“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. While it’s good that the economy is creating jobs, the fact higher rates are a practical certainty isn’t great for stocks. A separate report from the Commerce Department showed the trade deficit widened in October as exports hit a three-year low.
Advertisement
Manufacturers, which trimmed 1,000 jobs, have been hurt by the oil slump as drilling companies cut back orders for steel pipes, and by a strong dollar that has curtailed exports.
