US unemployment remains at 5 percent after economy pumps out 211,000 new jobs
Strong hiring across the US economy in November lent fresh support Friday to the Federal Reserve embarking on a long-awaited series of interest rate hikes later this month.
The US economy pumped out 211,000 new jobs last month, and the previous two months were significantly better than previous estimates, the Labor Department reported.
The unemployment rate was unchanged at 5.0 percent, the lowest level in seven years and down from 5.8 percent a year ago, as the US economy continues to fend off the drag from the slowdown in the global economy.
A broad range of industries were expanding payrolls at a strong pace: construction, retail trade, finance, education and health, business services, and restaurants and hotels.
Even government, long a weak spot in hiring, joined in with 14,000 net new positions.
There were still weaknesses in the report: average wage gains remain slow — up just 0.16 percent from October; the ratio of working age people participating in the labor force is historically very low; and the number of people forced to take part-time jobs increased by 319,000 to a still-large 6.1 million.
But overall the report indicated a firming of the jobs market and a resilience in growth that would allow the Fed to begin raising its benchmark federal funds rate after keeping it locked near zero for nearly seven years, economists said.
– Strong support for rate hike –
The data added support for the confidence that Fed Chair Janet Yellen expressed on two occasions this week that the US economy is growing at a steady, moderate pace and will continue to do so for the next few years, and is resilient enough for higher rates.
The jobs numbers are “certainly no reason for the Fed not to tighten on December 16,” said Jim O’Sullivan of High Frequency Economics.
“The Fed will raise rates in December and data are now being watched primarily to determine how quickly rates rise next year and beyond,” echoed Chris Low, economist at FTN Financial.
With the November report, the average monthly increase in jobs over the past 12 months is 237,000, and the number of officially unemployed people has fallen by 1.1 million.
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.
Yet the continued sluggishness of wage gains, and the high numbers of part-time workers remain signs of persistent slack in the jobs market.
And at 62.5 percent, the labor force participation rate remains near its lowest level in almost four decades.
In a speech Wednesday Yellen conceded those weaknesses, which for some argue against raising the fed funds rate.
“A significant number of individuals now classified as out of the labor force would find and accept jobs in an even stronger labor market,” she said.
“Some who are counted as out of the labor force might be induced to seek work if the likelihood of finding a job rose or if the expected pay was higher.”
But she argued that over the coming year these indicators of slack will disappear with continued overall economic growth.
Average hourly wages, up 2.3 percent year-on-year in Friday’s Labor Department report, supported Yellen’s argument that wage gains were accelerating after a long period of stagnation.
“All of this is consistent with a labor market that is beginning to tighten,” said Nariman Behravesh, chief economist at IHS Global Insight.
US equity markets took the report as a confirmation that the economy continues to grow at a good pace, with the S&P 500 jumping 1.0 percent in early trade.
But the dollar was virtually unchanged at $1.0935 per euro and Treasury bond yields, which had already climbed this week on Yellen’s remarks, were also little-affected.