Strong U.S. job growth in November bolsters economy's
outlook
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[December 09, 2017]
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. job growth
increased at a strong clip in November, painting a portrait of a healthy
economy that analysts say does not require the kind of fiscal stimulus
that President Donald Trump is proposing, even though wage gains remain
moderate.
Nonfarm payrolls rose by 228,000 jobs last month amid broad gains in
hiring as the distortions from the recent hurricanes faded, Labor
Department data showed on Friday. The government revised data for
October to show the economy adding 244,000 jobs instead of the
previously reported 261,000 positions.
November's report was the first clean reading since the storms, which
also impacted September's employment data.
Average hourly earnings rose five cents or 0.2 percent in November after
dipping 0.1 percent the prior month. That lifted the annual increase in
wages to 2.5 percent from 2.3 percent in October. Workers also put in
more hours last month.
The unemployment rate was unchanged at a 17-year low of 4.1 percent amid
a rise in the labor force. Economists polled by Reuters had forecast
payrolls rising by 200,000 jobs last month.
The fairly upbeat report underscored the economy's strength and could
fuel criticism of efforts by Trump and his fellow Republicans in the
U.S. Congress to slash the corporate income tax rate to 20 percent from
35 percent.
"The labor market is in great shape. Tax cuts should be used when the
economy needs tax cuts and it doesn't need tax cuts right now," said
Joel Naroff, chief economist at Naroff Economic Advisors in Holland,
Pennsylvania. "When politics and economics are mixed in the stew, the
policies that are created often have a very awful smell."
Republicans argue that the proposed tax cut package will boost the
economy and allow companies to hire more workers. But with the labor
market near full employment and companies reporting difficulties finding
qualified workers, most economists disagree. Job openings are near a
record high.
The White House said the strong jobs report was a sign that "Trump's
bold economic vision continues to pay off." The Democratic Party,
however, said Republicans are handing working American families a "bad
deal."
The economy grew at a 3.3 percent annualized rate in the third quarter,
the fastest in three years, and appears to have maintained the momentum
early in the October-December quarter.
The average workweek rose to 34.5 hours in November, the longest in five
months, from 34.4 hours in October. Aggregate weekly hours worked surged
0.5 percent last month after October's 0.3 percent gain.
"A six-minute increase in the work week does not sound like much, but
given the size of the labor market, it turns out to be significant in
terms of output," said Marc Chandler, global head of currency strategy
at Brown Brothers Harriman in New York.
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Brochures are displayed for job seekers at the Construction Careers
Now! hiring event in Denver, Colorado U.S. August 2, 2017.
REUTERS/Rick Wilking
The dollar was trading higher against a basket of currencies, while prices for
U.S. Treasuries fell. Stocks on Wall Street rose.
FULL EMPLOYMENT
While November's employment report had no impact on expectations the Federal
Reserve will raise interest rates at its Dec. 12-13 policy meeting, it could
help shape the debate on monetary policy next year.
The U.S. central bank has increased borrowing costs twice this year and has
forecast three rate hikes in 2018.
Employment growth has averaged 174,000 jobs per month this year, down from the
average monthly gain of 187,000 in 2016. A slowdown in job growth is normal when
the labor market nears full employment.
The economy needs to create 75,000 to 100,000 jobs per month to keep up with
growth in the working-age population.
The unemployment rate has declined by seven-tenths of a percentage point this
year. A broader measure of unemployment, which includes people who want to work
but have given up searching and those working part time because they cannot find
full-time employment, ticked up to 8.0 percent last month from a near 11-year
low of 7.9 percent in October.
Economists believe shrinking labor market slack will unleash a faster pace of
wage growth next year. Higher wages and tax cuts will fuel inflation.
Some say wage growth is being understated.
"Most recognize that average hourly earnings is a flawed gauge of wages, since
it is currently being held down by the fact that higher-paid older workers are
retiring," said Michelle Girard, chief economist at NatWest Markets in Stamford,
Connecticut.
The growth in employment was broad in November. Construction payrolls increased
by 24,000 jobs, thanks in part to rebuilding efforts in the areas devastated by
the hurricanes, after rising 10,000 in October.
Manufacturing scored another month of solid job gains, with payrolls increasing
by 31,000 jobs after rising 23,000 in the prior month. Retail payrolls grew by
18,700 jobs last month, the largest gain since January. Employment at department
stores increased by 3,100 jobs, likely boosted by hiring for the holiday season.
Retailers, including Macy's Inc, <M.N> reported strong Black Friday sales.
Macy's said this month it would hire an additional 7,000 temporary workers for
its stores to deal with heavy customer traffic in the run-up to Christmas.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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