Consider it a done deal.
American employers expanded their payrolls at a robust pace in November, the government reported Friday, all but guaranteeing policy makers at the Federal Reserve will raise interest rates for the first time in nearly a decade when they meet later this month.
In addition to 211,000 new hires last month — a bit more than Wall Street had expected — the Labor Department also revised upward its earlier estimate of job creation in September and October by a total of 26,000. The unemployment rate was unchanged at 5 percent.
The labor market strength evident in the November data removes the last major uncertainty before the Fed decision.
Graphic | Change in Jobs and Unemployment Rate
“This is a green light from our perspective,” said Phil Orlando, chief equity strategist at Federated Investors.
Wall Street, which in the past has sold off after strong jobs data and the prospect of higher interest rates, greeted the report with enthusiasm, perhaps because it removes any remaining uncertainty about the Fed’s plans. In midday trading on Friday, stocks reversed Thursday’s losses and rose by nearly 2 percent; bond yields fell very slightly.
The report on Friday echoes other recent positive data on job openings, new weekly claims for unemployment benefits and private payroll surveys, Mr. Orlando added. “This is a good number for liftoff,” he said, referring to the expected move by the central bank, which has held rates near zero since Dec. 2008.
Over all, the Labor Department data painted a picture of an economy that is growing steadily and creating jobs at a healthy pace, even as wage gains remain subdued and many Americans are still stuck on the sidelines of the recovery.
Interactive Feature | Why December Is Looking Likelier for a Fed Rate Increase Six and a half years ago, the Federal Reserve put its benchmark interest rate close to zero, as a way to bolster the economy. But that policy is expected to change.
If hiring continues at a healthy pace next year, as most economists now predict, could also blunt Republican criticism in the presidential campaign of Democratic economic policies, which have been a prominent target for the current crop of G.O.P. candidates.
With an average monthly payroll increase of 210,000 so far this year, the 211,000 gain in November — though still subject to revision — has a metronomelike element of consistency. It is also near the average monthly increase of 199,000 in 2013 and 260,000 in 2014.
“For a long time, I’ve thought the labor market was in pretty good shape, and this just confirms that,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman in New York.
Following the release of the jobs report, the president of the Federal Reserve Bank of Philadelphia, Patrick Harker, added his voice to the chorus of Fed officials who now say it is time for the central bank to raise interest rates.
“Raising rates this year will, in my view, serve to reduce monetary policy uncertainty and to keep the economy on track for sustained growth with price stability,” Mr. Harker said at a Fed conference in Philadelphia.
Still, even after more than six years of economic recovery from the devastating financial crisis, the labor market is still well below its pre-recession levels and pockets of economic weakness remain.
At 62.5 percent, the proportion of Americans in the labor force remains near multidecade lows. The jobless rate for African-Americans rose by 0.2 percentage points in November to 9.4 percent, more than twice the 4.3 percent level for white Americans.
Moreover, the economy is still 2.8 million jobs short of where it would have to be to match pre-recession employment levels while also absorbing new entrants into the work force, according to the Hamilton Project, a research group associated with the Brookings Institution in Washington. Even if the current trend continues, that so-called ‘jobs gap’ won’t be closed until mid-2017.
Besides the tempo of hiring and the unemployment rate, Fed policy makers have been paying close attention to the pace of wage increases. In November, the government said wages rose by 0.2 percent, leaving the 12-month change in average hourly earnings at 2.3 percent higher.
Despite steady hiring gains and a falling unemployment rate, in recent years wage growth has barely advanced faster than inflation. In October, that trend seemed to improve somewhat, with an unexpectedly strong 0.4 percentage point increase in average hourly earnings that pushed the 12-month gain to 2.5 percent even as the pace of inflation has fallen, mostly because of lower energy prices.
But with November’s figures reverting back to the earlier trend, Mr. Clemons said, “I don’t think there’s a lot of wage pressure yet.”
As a result, he foresees two more interest rate increases next year, bringing short-term rates to about 0.75 percent at this point next year. Other analysts, like Mr. Orlando, expect the Fed to raise rates roughly every other meeting next year, or three increases in total. That would bring the Fed’s benchmark rate to about 1 percent in the fall of 2016.
This week, the chairwoman of the Federal Reserve, Janet L. Yellen, and other top Fed officials made clear that a rate increase was imminent unless the economic data went wildly awry. Raising rates, Ms. Yellen said in a speech Wednesday, would be “a testament, also, to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession.”
“It is a day that I expect we all are looking forward to,” she added.
In the November data, the mix of sectors’ doing the hiring was encouraging, with big gains in construction, education and health services and the white-collar professional and business services sector.
On the other hand, the mining and logging sector lost 11,000 jobs, hit by continuing job cuts in the oil patch and other commodity-dependent industries.
One wild card in the November report was the retail sector. But the data showed stores’ adding 31,000 retail jobs.
Even as retailers prepare for the holidays, so too are shipping companies, warehouses and other logistics specialists. The transportation and warehousing sector added 6,400 jobs in November, reversing losses in September and October.
In Chicago, Redwood Logistics has been on a steady growth track all year, adding about 100 employees in the last 12 months, said the company’s chief executive, Todd Berger.
With a nationwide work force of about 425, Mr. Berger said he anticipated hiring another 100 workers in the next year. Although many people might consider strong shoulders to be the main qualification for a job at a shipping and transportation company, as in many other industries, the reality is very different.
Most of Redwood’s jobs require a college degree, Mr. Berger explained, or even graduate work in specialties like supply chain management. In November, Redwood filled three managerial positions, all of which paid more than $100,000 a year and required specialized training and experience.
Salaries for less-skilled positions, like truck drivers, have also been creeping up. In Texas, Redwood has been hiring drivers from among the legions of workers laid off from the energy industry amid the collapse in oil prices.
“Our drivers will go to work in the oil fields when that’s hot,” he said. “Now they’re coming back.”
This entry passed through the Full-Text RSS service – if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.
No comments:
Post a Comment