The economy added 228,000 new payroll jobs and unemployment held at 4.1 percent in November, the Bureau of Labor Statistics reported Friday.
Job creation easily exceeded forecasters' expectations, which were for the country to 190,000 new jobs as the Texas and Florida economies continued to recover from the hurricanes that made September the worst jobs month in years.
The strong report suggests that commerce remains resilient nearly nine years into the recovery. Hispanic unemployment hit a record low of 4.7 percent as the employment gains continued to mount across a range of industries.
With November’s numbers in and revisions to the previous two months’ reports, the past three months have averaged 170,000 new jobs. Although a slower pace than the catch-up job growth of recent years, that is well more than the roughly 50,000 to 100,000 jobs needed each month to keep unemployment stable.
Job growth has remained strong even though the unemployment rate is already lower than Federal Reserve officials projected in September it would go after the economy reached full employment.
In fact, the robust hiring in the face of low unemployment and low inflation could be a sign that, counter to the assessments of some Fed officials, there could still be major reserves of people willing to take jobs, and the economy isn’t at risk of “overheating.”
Nevertheless, the Fed is widely expected to continue raising its interest rate target this month. "The market overall believes that the Fed will continue to move along on its path and the expected rate hike next week," said Doug Clark, Chief Portfolio Strategist at Prime Advisors, Inc.
At the same time, Congress is poised to pass a major fiscal stimulus in the form of a $1.5 trillion net tax reduction, a policy that would cut in the opposition direction of Fed tightening. President Trump has justified the tax cut as needed to continue job growth and to maintain business confidence.
As for whether the labor market really is as healthy as it could be, an underlying question regarding is whether labor force participation could improve. The labor force participation rate held at 62.7 percent in December.
Labor force participation cratered during the recession. In part, that decline was attributable to the weakness of the jobs market, as many people gave up on searching for work and thus dropped out of the calculation of the labor force. But it’s also a reflection of long-running demographic changes, including the retirement of the Baby Boom generation.
Despite those ongoing demographic changes, the labor force participation rate hasn’t dropped significantly in four years, suggesting that the labor market is now strong enough to retain workers — or even bring in people off the sidelines.
In some parts of the country, employers are desperate to find available labor. In New Hampshire, for instance, where the unemployment rate is below 3 percent, the state is trying to connect businesses with recovering drug addicts.
Yet some at the Fed have argued that if labor markets really were “tight,” the country would be seeing faster wage growth. “There's no indication in wages that the labor market is overheating, or even hot,” Fed governor Jerome Powell said last week in a Senate hearing on his nomination for Fed chairman.
On that score, Friday's report was a disappointment. Hourly wages grew at 2.5 percent annually, no faster than in recent months.
"We need to be able to drive more wages to our hardworking citizens of our country, and we very firmly believe tax reform will drive wage growth," White House National Economic Council director Gary Cohn said Friday morning on Bloomberg.
At the same time, though, the lack of wage pressures is good news in the sense that it suggests that even more job growth is possible.
"I think there is room to grow the labor markets without pushing on inflation at this point, and I think it bodes well," said Clark.
Other details of the report were also encouraging.
Underemployment is down 1.3 percentage points on the year, according to the "U6" unemployment rate that accounts not just for those who can't find work, but also people forced into part-time jobs or only sporadically seeking positions.
The total employment rate, relative to population, for people in their best working years continued its long, steady climb. That measure is valuable because it focuses on people not likely to be considering retirement or additional schooling.
The past year has been particularly good for workers lacking education, who suffered the most during the recession. For the 10 million workers without a high school diploma, unemployment fell 2.7 percentage points to 5.2 percent over the year.
The improvements were driven by job gains across a number of sectors.
Manufacturing added 31,000 jobs in November, and manufacturers have brought on 189,000 new workers in the past year.
Business support services and the health care industry also showed strong job gains. No major sectors showed big job losses, although the federal government did shed 3,000 workers in the month.