The U.S. economy added 211,000 jobs in November, a solid boost that likely means the Federal Reserve will raise interest rates later this month. The labor force participation rate – the percentage of Americans holding down or seeking a job – is at a historically low level and has fallen steadily for years.
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Some of October’s growth was the economy making up for a lackluster August and September, when job growth was well below 200,000 a month. The revisions put October job growth at 298,000, the best month since previous year.
“An increase of 211,000 people in employment the other side of the pond makes a U.S. interest rate rise in December seem like a certainty”, said Russ Mould at AJ Bell. The unemployment rate remained unchanged at 5 percent.
According to the Beige book released by the Federal reserve earlier this week, policy makers believed that consumer spending and higher construction spending would be pivotal for United States economic growth in the coming quarters. Most economists want to see wages rise consistently over a long period – a sign that the reservoir of job-seekers has shrunk to the point where employers give raises to compete for hires.
“There is no doubt that if we had to intensify the use of our instruments to ensure that we achieve our price stability mandate, we would”, he said in a speech at the Economic Club of NY.
A surprisingly strong October report has already fueled expectations for a December rate hike.
Oilfield services provider Schlumberger this week announced another round of job cuts in addition to 20,000 layoffs already reported this year.
Average hourly earnings jumped to $25.25 and are now up 2.3 percent from this time past year. “The job market still has a lot of steam and the Fed should be comfortable raising interest rates”.
Manufacturing employment, meanwhile, slipped by 1,000 and jobs in mining and logging, which has been hit by the slump in oil investment, fell by 11,000.
The agency says, “The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.1 million in November and has shown little movement since June”.
The unemployment rate was unchanged at 5.0 per cent, the lowest level in seven years, as the economy continues to fend off the drag from the slowdown in the global economy.
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“As the labor markets gets tighter, the downward trend in the unemployment rate is naturally becoming more moderate, yet we still expect the rate to reach 4.5% a year from now”, Levanon said.
