US economy’s solid hiring makes rate rise by Fed likely this month
Print Edition
THE US economy generated another month of solid hiring in November, making it highly likely that the Federal Reserve will raise interest rates from record lows this month.
The Labor Department said yesterday that employers added 211,000 jobs, led by big gains in construction and retail. And the government revised up its estimated job growth for September and October by a combined 35,000.
The jobless rate stayed a low 5 percent for a second straight month. More Americans began looking for jobs in November, and most found them.
Employers have now added an average 213,000 jobs a month over the past six months. The robust hiring shows consumer spending is powering the economy even as weak growth overseas and low oil prices hurt US producers and drillers.
Fed Chair Janet Yellen said this week that the economy appeared to be improving enough to justify a rate hike as long as no major shocks undermine confidence before the Fed meets December 15-16. The Fed has kept its key short-term rate at a record low near zero for seven years.
For the Fed, conditions seem nearly ideal for a period of small and only gradual rate increases in coming months: Job growth has been consistently solid, and wages have begun to rise but not so much as to cause concern about future high inflation.
Since the Great Recession ended six and a half years ago, average hourly pay has grown at only about two thirds of the pace typical of a healthy economy. In November, average hourly wages rose 2.3 percent from 12 months earlier. The November jobs report shows that the US economy “is strong enough to withstand an initial hike in interest rates from what were seen as emergency record-low levels,” said Chris Williamson, chief economist at Markit. “A December rate hike now looks to be in the bag.”
Job gains were broad-based across the economy in November. Construction companies added 46,000 jobs, the most in two years. Spending in that sector has reached its highest level in eight years, boosted by more homebuilding and development of more roads and infrastructure.
The sizable gain in construction jobs last month, even as the Fed is preparing to raise rates, suggests that few expect higher borrowing costs to derail home building or sales.
“It was heartening to see growth in construction and that manufacturing held steady as ... both are sensitive to higher interest rates,” said Tara Sinclair, chief economist at job search site Indeed.com.
Government added 14,000 positions in November, retailers nearly 31,000. But factories shed 1,000 jobs.
Americans are spending more on costly items like cars and homes. Their stepped-up spending has supported the US economy and offset drags from falling oil prices and weak growth overseas.
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