A solid November job gain of 211,000 showed that despite weak overseas growth and struggling USA factories, the economy appears healthy enough to withstand a Fed hike from record low rates later this month.
Advertisement
Friday’s jobs report also highlighted Brainard’s argument that weakness in the global economy could constrain USA growth more than policymakers now anticipate.
Employment gains for October and September, meanwhile, were revised up by a combined 35,000, the report added.
Before the report for November, economists had been looking for payrolls to rise by 200,000, with no change in the unemployment rate.
In the US, investors have been bracing for a rate hike for years and have simply grown tired of the debate about when the Fed should raise interest rates.
“The bottom end of the range of forecasts in Reuters polls on non-farm payroll figures for the coming year has been consistently trimmed lower by analysts over the past few months – just 100,000 jobs per month on average in some quarters of next year”, writes Siddharth Iyer at Reuters’ blog Macroscope.
In his first public comments on policy since taking the job in July, Philadelphia Fed President Patrick Harker said he expects “steady and modest” growth as the economy is “approaching normalcy”. More than 12 million were added during the economic recovery that followed, for a net gain of over 5 million jobs. The jobs gains exceeded expectations.
The biggest drop in employment in the sector was in transit and ground passenger transportation, which lost 1,800 jobs last month. 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. That pace is stronger than any year over the past decade other than 2014.
James Knightley, an ING economist, said that the data “cements” hopes of higher rates, suggesting that the figures were consistent with the Fed’s desire of “some further improvement in the labour market” before raising rates.
Though wage growth slowed last month, economists say that was mostly payback for October’s outsized gains, which were driven by a calendar quirk. The Institute for Supply Management said Tuesday that its US manufacturing index fell to a six-year low in November, signaling contraction.
Oilfield services provider Schlumberger this week announced another round of job cuts in addition to 20,000 layoffs already reported this year.
Fed Chair Janet Yellen told Congress Thursday that she is seeing a lot of economic data showing the recovering economy no longer needs such help.
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.
Advertisement
It increased to 9.4 percent in August 2009, a 30-year high.
