U.S. jobless rate falls
to nine-year low, payrolls rise
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[December 03, 2016]
By Lucia Mutikani
(Reuters) - The U.S. unemployment rate fell to a nine-year low of 4.6
percent in November, as employers added another 178,000 jobs, making it
almost certain that the Federal Reserve will raise interest rates later
The unemployment rate hit its lowest level since August 2007 because
more people found work but also because the labor force shrank as more
people retired, lowering the number of working-age people in the labor
force to 62.7 percent.
U.S. nonfarm payrolls increased by 178,000 jobs last month after
increasing by 142,000 in October, the Labor Department said on Friday.
Economists had forecast payrolls rising by 175,000 last month and the
unemployment rate remaining unchanged at 4.9 percent.
"The decline in the unemployment rate and the unambiguous decrease in
labor market slack are likely to place further upward pressure on
inflation. This report easily clears the bar for a December rate hike,"
said Michael Gapen, chief economist at Barclays in New York.
Wages slipped for the first time in nearly a year though after two
straight months of increases. Economists partially blamed the drop in
average hourly earnings on a calendar quirk, which they expect Fed
officials will overlook at their Dec. 13-14 policy meeting.
Average hourly earnings fell three cents, or 0.1 percent, after rising
0.4 percent in October and gaining 0.3 percent in September. Average
hourly earnings fell for workers in mining, manufacturing and utilities
Last month's drop in wages lowered the year-on-year gain to 2.5 percent
in November from October's 2.8 percent increase, which was the largest
rise in nearly 7-1/2 years.
"This is likely to be a temporary setback, as further tightening in
labor market conditions should increase competition for skilled labor
and support stronger wage growth," said Jim Baird, chief investment
officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.
A broad measure of unemployment, that includes people who want to work
but have given up searching and those working part-time because they
cannot find full-time employment, fell two-tenths of a percentage point
to 9.3 percent, the lowest level since April 2008.
After a rally of about 6.0 percent in the past three weeks, U.S. stocks
ended little changed in the wake of the jobs data on Friday.
U.S. Treasury bond yields on Friday eased from multi-month highs after
the worst sell-off in debt markets in nearly eight years following the
election of Donald Trump as U.S. president in early November.
Trump's plan to increase infrastructure spending and cut taxes could
encourage companies to boost hiring and spur an even faster pace of
economic growth over the coming years, analysts said.
Job gains have slowed from an average of 229,000 per month in 2015 to an
average of 180,000 this year as the labor market nears full employment.
Still, the monthly increases are more than enough to absorb new entrants
into the labor market.
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Job seekers fill out applications during the 11th annual Skid Row
Career Fair the Los Angeles Mission in Los Angeles, California, U.S.
on May 31, 2012. REUTERS/David McNew/File Photo
Fed Chair Janet Yellen has said the economy needs to create just under
100,000 jobs a month to keep up with growth in the working-age
"It is not that firms aren't trying to hire, they just cannot find
qualified workers at the wages they want to pay," said Joel Naroff,
chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
The jobs report added to data on consumer spending, the housing market
and manufacturing in suggesting the economy continued to gain momentum
in the fourth quarter after output rose at its fastest pace in two years
in the third quarter.
About 226,000 people dropped out of the labor force last month. As a
result, the labor participation rate, or the share of working-age
Americans who are employed or at least looking for a job, fell 0.1
percentage point to 62.7 percent.
The participation rate is near multi-decade lows, partly reflecting
demographic change. Economists believe that the low participation rate
is hindering faster wage growth.
Job gains last month were broad, though manufacturing shed another 4,000
jobs. Manufacturing payrolls have now dropped for four straight months.
Construction employment increased by 19,000 jobs last month after rising
by 14,000 in October.
The retail sector shed 8,300 jobs in November, which could reflect a
shift toward online shopping that has forced department stores such as
Macy's Inc <M.N> to close several stores. Retail jobs have declined for
two straight months.
Professional and business services payrolls increased by 63,000 last
month. Healthcare and social assistance employment increased by 34,700.
Temporary-help jobs, a harbinger for future hiring, rose by 14,300.
Government employment gained 22,000 jobs. There was a surge in local
government hiring, which could have been driven by the Nov. 8 U.S.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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