The economy appears to be on its firmest footing in at least a decade, with hiring picking up from earlier this year and the unemployment rate holding at a 17-year low in November.
Nonfarm payrolls rose a seasonally adjusted 228,000 in November, the Labor Department said Friday. It was a slight slowdown from October hiring, which was boosted by a rebound from late-summer hurricanes, but was well above the pace recorded earlier this year. Revised figures showed the economy added 3,000 more jobs than previously estimated in October and September.
Meanwhile, the unemployment rate remained at 4.1% last month, matching the lowest level since December 2000.
Economists surveyed by The Wall Street Journal had expected 195,000 new jobs and a 4.1% unemployment rate last month.
“The labor market enters 2018 on a high note,” said Jed Kolko, chief economist at job search site Indeed. “Still, there might be room to improve. While the headline unemployment rate is back to its late-2000 level, broader employment measures aren’t there yet — and wage acceleration remains limited.”
The one gray mark in Friday’s report was wage growth. Average hourly earnings for private-sector workers increased by a nickel last month after declining in October. Wages rose just 2.5% from a year earlier in November — near the same lackluster pace maintained since late 2015, despite a much lower unemployment rate.
But in a positive sign for Americans’ incomes, the average work week increased by about 6 minutes to 34.5 hours in November.
November marked the 86th straight month employers added to payrolls. The U.S. labor market is maintaining its strength at a time when other aspects of the global economy are on the upswing. Economic growth in the U.S. and Europe accelerated during the summer months and Japan is experiencing its longest sustained expansion in 16 years.
A global economy hitting on all cylinders comes as U.S. lawmakers appear close to finalizing a tax overhaul that could add stimulus to domestic growth. It is difficult to say how much of November’s hiring can be connected to the possibility of tax-policy changes. Job creation this year is slightly slower than 2016’s pace, though that was anticipated as a tight labor market makes it difficult for firms to find available workers.
The Federal Reserve is widely expected move to lift its benchmark interest rate at a meeting next week, a decision Friday’s jobs numbers are unlikely to alter.
Central bankers, however, could be more inclined to push rates up at a slightly faster pace next year if the job market keeps cranking out strong monthly gains. In September, Fed officials forecast the unemployment rate would end this year at 4.3%, and end next year at 4.1%, meaning the job market has already hit the milestones officials thought would take an additional year to reach.
“The Fed has to be cognizant of the fact that if we run employment at 4%, inflation could rise above their 2% target,” said Gus Faucher, economist at PNC Financial Services. “If they let unemployment get too low, they may have to raise rates more aggressively, and that risks causing a recession.”
The unemployment rate was last below 4% in late 2000. A recession began in March 2001.
Friday’s report showed the employers added jobs in most major categories, including construction, manufacturing, retail and health care. Leisure and hospitality, the sector most impacted by recent hurricanes, grew by 14,000 jobs last month, a somewhat weaker gain compared to average monthly growth this year before hurricanes Harvey and Irma struck the southern U.S. in late summer.
All levels of government added 7,000 jobs to payrolls last month.
The share of Americans participating in the labor force held steady at 62.7% in November. Participation has largely moved sideways the past two years, a positive sign that some Americans are being drawn in off the sidelines and helping to counter the trend of baby boomers retiring.
A broad measure of unemployment and underemployment that includes Americans stuck in part-time jobs or too discouraged to look for work ticked up to 8.0% in November from 7.9% the prior month. The October reading was the lowest since 2006.
Source: Dow Jones