USA job growth remained solid in November, increasing the chances that the Federal Reserve will raise interest rates from record lows later this month.
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The closely watched “non-farm payroll” figures – produced by the Bureau of Labor Statistics – also showed the unemployment rate held steady at its seven-and-a-half year low of 5 per cent.
The good news on employment gains in November was also sweetened by revised estimates of job gains in the previous two months, Gary Burtless, a senior fellow at the Brookings Institute, wrote in an article Friday.
Though wage growth likely slowed last month, economists say that would mostly be payback for October’s outsized gains, which were driven by a calendar quirk. The Dow Jones rose 1.32 per cent or 229.89 points to 17707.56 in early trading, and the S&P 500 gained 19 points, or 0.95 per cent to 2,069. The Standard & Poor’s 500 index had its best day since September 8, rising 42.07, or 2.1 percent, to 2,091.69. While it’s good that the economy is creating jobs, the fact higher rates are a practical certainty isn’t great for stocks.
Manufacturing has been crippled by a strong dollar, efforts by businesses to reduce bloated inventory and spending cuts by energy companies scaling back well drilling and exploration in response to sharply lower oil prices.
The November jobs report is scheduled for release today, providing a last key bit of economic data for the Fed before a policy meeting on December 15-16 that may see the first United States interest rate increase in a decade.
It’s expected the Fed will boost rates slightly later this month and follow up with at least a few more hikes throughout 2016. Factory employment has declined in three of the last four months.
Construction led the way with 46,000 jobs added, after adding 34,000 positions in October and 19,000 in September.
Many have said that the Fed only needed a decent November jobs report to clear the way for a rate hike.
Employment numbers are one of the leading factors the Fed is taking into consideration while weighing whether the economy is stable enough to hike rates for the first time since the financial crisis. The number of workers unemployed for 27 weeks or longer was unchanged at 2.1 million for November, while the number of workers employed part-time for economic reasons increased by 319,000 to 6.1 million. Job growth has been solid, and wages have begun to rise, but not so much as to cause concern about future high inflation.
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Average hourly pay for all employees on private nonfarm payrolls “rose by 4 cents to $25.25, following a 9-cent gain in October”, the agency says, adding that average hourly earnings have risen by 2.3 percent over 2015. It’s still far below the roughly 3.5 percent pace typical of a strong economy.
