U.S. Nonfarm Payrolls rose 178000 in November and unemployment rate falls to 4.6 %
U.S. employers hired at a steady clip in November while the unemployment rate fell to the lowest level in nine years, signs of enduring labour-market growth that will likely leave Federal Reserve officials on track to raise interest rates later this month
Nonfarm payrolls rose by a seasonally adjusted 178000 in November from the prior month, the Labour Department said December 2, 2016. The unemployment rate dropped to 4.6 % last month, the lowest level since August 2007 as some people found jobs while even more dropped out of the workforce.
Economists surveyed by The Wall Street Journal had expected 180000 new jobs and a jobless rate of 4.9 % in November.
“This jobs report paves the way for Fed rate hikes,” said Jason Schenker, president of Prestige Economics. “It also tops off a recent run of continually positive economic data.”
The U.S. labour market has been a bright spot through a long recovery marked by sluggish growth. But Friday’s report highlighted some underlying economic crosscurrents that have lifted the prospects of many Americans while creating new setbacks for others.
The unemployment rate, for example, fell partly because more people found jobs. But more than 400,000 Americans dropped out of the labor force last month, likely a reflection of an aging population as well as some younger workers either giving up, going to school or staying home to care for dependents.
The labour-force participation rate, those with jobs or actively seeking work, edged down to 62.7 % in November from 62.8 % the prior month and continues to hover near a four-decade low. The rate for prime-age workers, those 25 to 54 years old, slipped to 81.4 % from 81.6 % in October.
Wage gains, meanwhile, are outpacing inflation but stumbled last month. Average hourly earnings for private-sector workers declined 3 cents from October, or 0.1 %, to USD 25.89 in November. Earnings were up 2.5 % from a year earlier, a small step down from October’s 2.8 %, which was the strongest annual wage growth since June 2009.
A broad measure of unemployment and underemployment, which includes those who have stopped looking and those in part-time jobs who want full-time positions, was 9.3 % in November, down from 9.5 % the prior month and the lowest level since April 2008. The rate averaged 8.3 % in the two years before the recession.
The mix of job creation has been heavily weighted toward the service sector, with professional and business services—everything from computer-systems design to temp workers—adding 571000 jobs and health care 407000 over the past year. Manufacturers have shed 54000 jobs and miners 87300 in the last year. Among traditionally blue-collar professions, construction has been perhaps the strongest with 155000 new jobs in the last 12 months.
“The November report is a puzzling mix of surprising developments,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
The employment report of December 2, 2016, was the last to be released before the Fed’s Dec. 13-14 meeting. Policy makers are expected to raise the central bank’s benchmark interest rate for only the second time in a decade.
Fed officials last raised the rate in December 2015 and before that in June 2006. But with the labour market nearing full employment and inflation showing signs of firming, another quarter-point move appears likely.
“In my view, the case for an increase in the federal-funds rate has clearly strengthened since our previous meeting” on Nov. 1-2, Fed governor Jerome Powell said earlier this week.
A slowdown in hiring, meanwhile, wouldn’t be unexpected for a labour market nearing full employment—when there is a rough match between people who want a job and employers who need a worker.
Job gains have averaged 180000 a month so far this year, down from 225000 during the same 11-month stretch in 2015.
Fed Chairwoman Janet Yellen a year ago said the economy needs to add “under 100000 jobs per month” to absorb new entrants into the labour force and adding about 200000 would be enough to draw workers off the side-lines.
The latest jobs report also comes on the heels of the Nov. 8 presidential election. The tight race generated some uncertainty for businesses and households, but didn’t appear to significantly affect hiring plans.
The surveys of businesses and households that are used to create the jobs report included periods before and after Election Day. Republicans, led by Donald Trump, won the White House and both chambers of Congress.