US jobless rate falls to lowest level in nine years
Fed rate rise in December now almost certain as unemployment rate drops to 4.6%
A plant in Buchanan County, Virginia. The solid gains in employment likely reflect rising confidence in the economy. Photograph: George Etheredge/The New York Times
US employers boosted hiring in November and the unemployment rate dropped to a more than nine-year low of 4.6 per cent, making it almost certain that the Federal Reserve will raise interest rates later this month.
Nonfarm payrolls increased by 178,000 jobs last month, the US labour department said on Friday. The solid gains in employment likely reflect rising confidence in the economy.
Data for September and October were, however, revised to show 2,000 fewer jobs created than previously reported. The three-tenths of a percentage point drop in the unemployment rate last month to its lowest level since August 2007 was both the result of more people finding work as well as dropping out of the labour force.
The report came on the heels of recent data showing the economy growing at a brisk clip in the third quarter, and gains in consumer spending, inflation, housing and manufacturing early in the fourth quarter.
Economists had forecast payrolls rising by 175,000 jobs last month and the unemployment rate unchanged at 4.9 per cent.
A pullback in wage growth after two straight months of solid increases put a wrinkle in an otherwise upbeat employment report. Average hourly earnings fell three cents, or 0.1 per cent, after shooting up 0.4 per cent in October.
The drop lowered the year-on-year gain in wages to 2.5 per cent in November from October’s 2.8 per cent increase, which was the largest rise in nearly 7½ years. The moderation largely reflects a calendar quirk, which economists expect Fed officials will overlook at their December 13th-14th policy meeting.
While a surge in US government bond yields and a rally in the dollar in the wake of Donald Trump’s election as the next US president had tightened financial market conditions, economists said it was probably insufficient for the Fed to stand pat.
The US central bank raised its benchmark overnight interest rate last December for the first time in nearly a decade.
As the labour market nears full employment, job gains have slowed from an average of 229,000 per month in 2015 to an average of 180,000 this year.
Still, the monthly increases are more than enough to absorb new entrants into the labour market.
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 population.