321,000 jobs added in Nov., most in nearly 3 years

Author: Associated Press
MGN Online

WASHINGTON (AP) – A burst of U.S. hiring in November – the most in nearly three years – added 321,000 jobs and provided the latest evidence that the United States is outperforming other economies throughout the developed world.

In addition, the government said Friday that 44,000 more jobs were added in September and October combined than it had previously estimated. So far this year, job gains have averaged 241,000 a month, putting 2014 on track to be the strongest year for hiring since 1999.

The unemployment rate remained at a six-year low of 5.8 percent.

“These were boom-like numbers,” said Mark Zandi, chief economist at Moody’s Analytics. “They indicate that the U.S. economy is on very solid ground.”

November’s robust job growth, reflecting a steadily rising economy, makes it likelier that the Federal Reserve will start raising interest rates by mid-2015 as many economists have speculated. The Fed has kept its key short-term rate at a record low near zero since 2008 to support the economy.

Friday’s jobs report also raised hopes that Americans’ pay might finally be starting to increase after barely budging since the Great Recession began seven years ago. The average hourly wage rose 9 cents in November to $24.66, the biggest gain in 17 months.

“The wage numbers are a wake-up call for the Fed,” said John Silvia, chief U.S. economist at Wells Fargo Securities.

Silvia noted that Fed Chair Janet Yellen has pointed to stagnant wages as a key reason to keep rates low. Higher wages could lead to higher prices, and the Fed might feel compelled to raise rates to limit inflation.

Still, over the past 12 months, hourly pay has risen just 2.1 percent, barely above the 1.7 percent inflation rate. And Scott Anderson, an economist at Bank of the West, noted that inflation remains below the Fed’s 2 percent target rate and will likely remain muted because of declining oil and gas prices. That might give the Fed some leeway to wait.

Investors welcomed Friday’s positive news: The Dow Jones industrial average jumped 66 points to 17,981 in mid-day trading. The yield on the 10-year Treasury note rose to 2.32 percent, from 2.25 percent, a sign that investors foresee a Fed rate increase relatively soon.

Hiring last month was boosted by seasonal hiring related to the holiday shopping season. Retailers added 50,200 jobs, the most in 11 months. Transportation and warehousing gained 16,700.

Shipping companies have announced ambitious plans, after some holiday gifts that were ordered online arrived late last year. UPS has said it expects to add up to 95,000 seasonal workers, up from 85,000 last year. FedEx plans to hire 50,000, up from 40,000.

But in a sign of the economy’s strength, solid job growth ranged across many industries. A measure of industries that added jobs reached its highest point since 1998.

Manufacturers added 28,000 jobs in November, the most in a year, and education and health services 38,000. Professional and technical services, a category that includes higher-paying jobs such as accountants, engineers and architects, gained 37,500 jobs, the most in 3½ years. Construction firms added 20,000.

The surge in hiring comes after the economy expanded from April through September at its fastest six-month pace in 11 years. The additional jobs should support steady economic growth in coming months.

Many analysts forecast the economy will grow 3 percent next year. If so, 2015 would mark the first time in a decade that annual growth would reach that threshold.

Even so, the U.S. job market remains far from fully recovered. There are 6.9 million people with part-time jobs, for example, who would prefer full-time work – up from 4.1 million before the recession.

And the pace of job creation hasn’t been fast enough to keep up with population growth. Many people who are out of work have given up searching for jobs – a trend that’s contributed to a lower unemployment rate. Once people stop looking for a job, they’re no longer counted as unemployed, and the rate can decline.

In addition, the number of people who have been out of work for more than six months is 2.8 million, more than double its pre-recession level.

“At this rate, we won’t return to pre-recession labor market health until October 2016 – nearly nine years since the recession began,” said Elise Gould, a senior economist at the liberal Economic Policy Institute.

At the same time, the number of involuntary part-time workers has fallen 13 percent in the past 12 months. And the number of long-term unemployed has declined 30 percent.

Overall, the improving U.S. job market contrasts with weakness elsewhere around the globe. Growth among the 18 European nations in the euro alliance is barely positive, and the eurozone’s unemployment rate is 11.5 percent. Japan is in recession.

China’s growth has slowed as it seeks to rein in excessive lending tied to real estate development. Other large developing countries, including Russia and Brazil, are also straining to grow.

Yet the U.S. economy is much less dependent on exports than are Germany, China and Japan. U.S. growth is fueled more by its large domestic market and free-spending consumers.

That trend helps support the steady U.S. job growth. Most of the industries that have enjoyed the strongest job gains depend on the U.S. market, such as retailers, restaurants, and education and health care.

Seva, a chain of fast-casual spas located mainly inside Wal-Mart stores, has been adding jobs all year while expanding from about 75 to 100 sites. It plans to open more free-standing spas in Georgia and Illinois next year.

CEO Vas Maniatis says its customers have been willing to splurge this year on higher-priced services such as body waxing and facials.

“People want the services,” he said. “They are willing to spend more money.”

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