US Jobs Situation Report Beat Expectations
The US added more jobs than forecast in November and the unemployment rate held at an almost 17-year low, lower wage gains suggest the labor market still has slack to absorb.
Payrolls rose 228,000, above the median economist estimate of 195,000, after a downwardly revised 244,000 advance, US Labor Department figures showed Friday.
Average hourly earnings increased 2.5% from a year earlier, less than the 2.7% projection, and October’s figures were revised lower.
The data provide a clearer picture of the labor market after volatility caused by two hurricanes mostly dissipated, though there may have been some lingering effects. While the job market remains a bulwark for the economy and investors see a Federal Reserve interest-rate hike next week as a near- certainty, the lack of acceleration in wages remains a puzzle that could factor into the pace of increases in Y 2018.
Average hourly earnings rose 0.2% from the prior month following a revised 0.1% drop, the report showed.
Analysts had penciled in a gain of 0.3% for November. The gain from a year earlier followed a downwardly revised 2.3% advance for October.
Economists expect that in time, wages will post a sustained pickup, which has remained elusive in this expansion even though labor-market slack is steadily disappearing.
Faster gains in paychecks would boost consumer spending, which accounts for about 70 percent of the economy.
Jerome Powell, President Donald Trump’s nominee to head the Fed, said last month at his confirmation hearing that he does not see wages signaling any tightness in the labor market.
The Trump Administration has said the tax-cut proposal in Congress, if it gets signed into law, will spur growth and boost wages, though economists generally expect a modest impact.
Several measures showed the labor market remains fairly steady.
The 2-month gain in payrolls was the strongest since mid-2016. The U-6, or underemployment rate, remained near the lowest since Y 2006, while the participation rate, or share of working-age people in the labor force, was unchanged at 62.7%.
The breakdown of data showed healthy gains across many industries, particularly in manufacturing and construction.
Healthcare and professional and business services also showed solid gains.
Restaurants and bars, which had showed bigger swings in the prior two months due to the storms, added 18,900 workers in November.
Revisions to prior reports added a total of 3,000 jobs to payrolls in the prior 2 months, according to the report.
Steady household demand and a pickup in business investment, backed by elevated consumer and business sentiment and improving global demand bode well for US employment. Nonetheless, payroll increases have been slowing the past few years, albeit in orderly fashion, as the labor market tightens.
Economists say job gains above 100,000 a month are still enough to keep putting downward pressure on the jobless rate.
Have a terrific weekend.