US Economy Creates 178K Jobs in November

Published December 2, 2016 by TNJ Staff
Business
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jobsThe U.S. economy produced another solid month of labor market growth, adding 178,000 net new jobs in November while the unemployment rate fell to a nine-year low, the Labor Department said Friday.

The latest jobs report virtually assures that Federal Reserve officials will raise a key interest rate this month.

The unemployment rate fell to 4.6 percent, the lowest since mid-2007, but the 0.3 percentage point drop was in large part because the labor market shrank by 226,000 people. It was the second-straight month the labor force shrank.

In another discouraging sign, wage growth reversed in November after mostly strong gains in recent months.

Average hourly earnings slipped by 3 cents to $25.89, the first decline in nearly a year, after jumping by 11 cents in October. Still, the figure was up a solid 2.5 percent for the 12 months ended Nov. 30, above the rate of inflation.

The November job growth was an improvement from October?s downwardly revised 142,000 figure.

Analysts had expected job growth of about 170,000 with the unemployment rate holding steady at 4.9 percent, near a nine-year low.

November?s job growth was right about average for 2016. So far this year, the economy has added a monthly average of 180,000 net new jobs, down from an unusually strong 229,000 monthly average in 2015.

Last month?s job gains were fueled by professional and business services, construction and health care.

Professional and business services companies expanded their payrolls by 63,000, up from 48,000 in October. Construction firms added 19,000 net new jobs in November, up from 14,000 the previous month.

And the health care sector expanded employment by 28,000, up slightly from 27,000 in October.

Those gains were partially offset by continued weakness in manufacturing. Manufacturers shed 4,000 jobs in November after losing 5,000 the previous month.

Fed Chairwoman Janet L. Yellen and other central bank officials have indicated a small rate hike was coming this month as long as the labor market and broader economy continued to improve.

Last week, the Commerce Department reported that the economy grew faster in the third quarter of the year than initially estimated. The 3.2 percent annual rate of growth was the strongest pace in two years.

Analysts forecast solid growth of about 3 percent for the fourth quarter. That has combined with expectations of large tax cuts and federal infrastructure spending by the incoming Trump administration, which would fuel more growth as well as inflation, to lead investors to strongly believe that the Fed would hike its benchmark interest rate this month.

The closely watched FedWatch Tool by the CME Group futures exchange put the odds of a quarter percentage point increase at the Fed?s Dec. 13-14 meeting at 93 percent before the jobs report was released. An increase would be the first in a year and nudge the target range for the federal funds rate, which is used to set terms for many consumer and business loans, to between 0.5 percent and 0.75 percent.

(Source: TNS)

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TNJ Staff