U.S. job growth cleared expectations in November with 211,000 new jobs and the unemployment rate holding steady at 5 percent, the Bureau of Labor Statistics reported Friday morning.
Economists had expected 190,000 new jobs.
Following the strongest month of job growth in October, November’s jobs gains are easily enough to assure officials at the Federal Reserve that there is no imminent threat to the jobs recovery. The report is likely to seal expectations that the central bank will raise interest rates at its upcoming December meeting, capping seven years of emergency measures to counteract the financial crisis.
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After some fears about a serious slowdown in the late summer, payroll gains have accelerated back to an average of 218,000 over the past three months, when Friday’s report is taken into account. Revisions in Friday’s release to the past two months’ reports revealed that job growth was greater than originally thought, by 35,000.
Other indications from Friday’s report suggested that underlying growth remains intact, if not as robust as hoped.
Labor force participation ticked up a tenth of a percentage point to 62.5 percent, as 273,000 people on net entered the labor force, according to the household survey. Workforce participation, currently at its lowest levels since the late 1970s, has dropped precipitously since before the 2008 financial crisis, driven by both demographic changes, such as the retirement of the Baby Boom generation, and by large numbers of workers losing hope of finding a job and quitting the search.
Average hourly earnings, meanwhile, grew at a 2.3 percent annual clip, down from the month before but slightly above recent gains. Inflation, meanwhile, has hovered near zero on an annual basis in recent months, meaning that workers have seen relatively strong gains in purchasing power.
In all, Friday’s report was consistent with the narrative of the U.S. economy told by Fed Chairwoman Janet Yellen, namely that it is slowed by some overseas developments but strong domestically and headed toward recovery.
The weak points in the survey clearly indicated the pressures on the U.S. emanating from the slowdown in China and other countries that has driven up the dollar and lowered oil prices. More than 11,000 mining jobs were lost in the month, mostly in sectors related to oil production. Over the past year, as the price of a barrel of oil has fallen by more than half, the U.S. has shed 122,000 mining-related jobs. Manufacturers, who have been strained by the strong dollar hurting exports, have struggled recently, shedding 1,000 jobs in November. Producers are “struggling under the yoke of global weakness and China’s massive industrial overcapacity,” Alliance for American Manufacturing president Scott Paul said in response to Friday’s report.
The weak growth in sectors exposed to foreign weakness, however, was not enough to offset domestic strength. The construction industry hired 46,000 new workers, and business services and health care also showed growth.
White House economic adviser Jason Furman heralded Novembers “strong pace of job growth, ” noting that the U.S. has “added more jobs over the past three years than in any three-year period since 2000, and wages are continuing to rise.”
Testifying Thursday on Capitol Hill, Yellen suggested that only 100,000 new jobs each month were needed to keep the unemployment rate stable. Friday’s number cleared that benchmark by more than double.
At 5 percent in November, the unemployment rate is only marginally above Fed officials’ estimate of the rate that reflects a healthy economy, namely 4.9 percent.
The unemployment rate doesn’t tell the whole story, Yellen has acknowledged. There are still unusually large numbers of people forced into part-time work or who are only intermittently looking for work because their prospects are so poor.
Nevertheless, the Fed’s expectation is that those groups will increasingly find jobs in the months ahead, and that the tightening labor market will eventually push up inflation toward the Fed’s 2 percent target. As a result, the Fed runs the risk of falling behind if it delays reversing its emergency stimulus measures.
