Job creation surges as US brushes off global slowdown
The US pumped out a huge 321,000 new jobs in November, brushing off a global economic slowdown with the best number in nearly three years, the Labor Department said Friday.
The surprise surge, some 90,000 jobs more than economists had predicted for the month, was broad-based, with job pickups in retail, office positions, construction and healthcare, and no particular help from government hiring.
Revisions to the two previous months added another 44,000 positions to the rolls of the employed, further attesting to resilience in the US economy even as China slows and Europe battles the threat of stagnation.
The unemployment rate, which is based on a separate set of Labor Department survey data than job creation, held steady at 5.8 percent, the lowest level since July 2008, having shed 1.2 percentage points from a year ago.
“A strong report. Although unemployment was flat, the trend is clearly still down,” said Jim O’Sullivan of High Frequency Economics in a client note.
But the data showed some persistent weakness in employment, too, more than five years after the end of the Great Recession.
Wage growth remained dull: while average hourly earnings jumped in the month, they were still up just 2.1 percent year-on-year. And participation in the job market held at a 62.8 percent, compared to more than 66 percent in the years before the sharp 2008-2009 downturn.
That in part relates to the low pay offered by many of the jobs created — 27 million jobs in hotels and restaurants, 37 million in health care services, 11 million in clothing stores, and 22 million temporary jobs.
It was also not clear how well the gains would hold, with at least some of the new jobs related to year-end hiring for the December holiday entertainment and gift-giving season.
But the data is adjusted to downplay the impact of the seasonal hiring surge, and so likely represents a solid jump in permanent hiring.
Moreover, there was an acceleration of job creation in higher-paid sectors, including construction, manufacturing, accounting services, transportation, and insurance — all signs of more durable strength in the market.
Analysts said that as job creation strengthens, wages will have to post more gains, and indeed, workers’ average hours showed a good increase in November.
Economist Harm Bandholz of UniCredit called the report “unequivocally strong.”
“Temporary hires by retailers for the holiday season added to the strong employment number in November -– but were not the most important driver,” he said.
“Instead, the acceleration in job gains was broad-based and affected almost every goods-producing as well service-providing industry….We expect that the diminishing slack in the labor market will continue to put upward pressure on wages.”
Analysts said the strong numbers raise the chance that the Federal Reserve could accelerate plans to begin raising interest rates, after holding the base fed funds rate at zero since the end of 2008.
“With job creation as strong as this and wages picking up, the economy looks increasingly able to withstand a modest tightening of policy,” said Bandholz.
“On the other hand, the lack of any significant wage growth points to a benign inflation outlook, which in turn suggests there remains no immediate rush to hike rates.”
US markets took the report as good news. Around a half hour into trade, the S&P 500 and the Dow Jones Industrial Average were both up about 0.2 percent.