The Fed has moved close to raising rates on a couple of occasions in the last couple of years, only to retreat after adverse reactions from the market or surprisingly weak economic figures that undermined the central bank’s case.
Advertisement
Revisions showed employers also added 35,000 more jobs in September and October than previously estimated. (The data are not seasonally adjusted.) These people were not in the labor force, wanted and were available for work and had looked for a job sometime in the prior 12 months.
Strong hiring is a reassuring sign of a healthy job market.
The U.S. economy generated another month of solid hiring in November, making it highly likely that the Federal Reserve will raise interest rates from record lows this month. The pace of future rate increases will be contingent on progress toward the central bank’s inflation goal and probably depends on how quickly wage pressures mount as the job market tightens. The department upwardly revised its job figures for the previous two months. Economist surveyed by CNNMoney predicted there would be 192,000 jobs added.
Advanced Electrical Systems Inc., a Louisville, Ky., firm that installs and maintains electrical systems, has expanded its workforce about 15% this year, to more than 220 employees, and expects to hire 10% more over the next month.
Describing November’s gains, the Labor Department saw growth “in construction, professional and technical services, and health care”. The Fed has a dual mandate: It must act to prevent the economy from overheating, but it must also do what it can to right a job market that, by some measures, has yet to fully recover from the 2008 recession.
Naeem Aslam, at Avatrade, said: ‘The only question which is left behind or is not answered is how much increase we are going to see- the market expectations are that the Fed will increase the rate by only twenty basis points.
The Fed got exactly what it needed to push ahead with a rate hike in December: More jobs. That is below October’s annual increase, which had been the strongest in six years.
With a nationwide work force of about 425, Berger said he anticipated hiring another 100 workers in the next year.
One of the largest increases occurred in construction which added 46,000 jobs. The government said 298,000 new jobs were created in October instead of 271,000. The civilian labor force participation rate, at 62.5 percent, changed little in November. Participation has declined this year, part of a broader trend that Yellen has said is related to the aging of the USA population.
“We will be looking, of course, carefully at tomorrow’s jobs report”, Janet Yellen, the head of the Federal Reserve, said Thursday while testifying before the US Congress joint economic committee. “If it were simply stable over time rather than on that declining trend, I think we would be absorbing people who were perhaps discouraged”.
The Federal Reserve will meet next week to decide on whether to raise rates, and most analysts anticipate the rate liftoff will be announced on December 16.
Robert Craig, private client investment manager at MB Capital, added: ‘With both the jobs and the momentum there, a rate hike in December is increasingly looking like a formality – both in terms of its likelihood and the impact on the markets.
Advertisement
Even as late as March 2014, writes Furman, economists were thinking that the unemployment rate would remain about 5.0% until 2020.
