Instant Analysis: Employment report for November

Posted By Scott Anderson In Economic Outlook | No Comments

The November jobs report virtually assures a Federal Reserve interest rate hike this month.  The November payroll report modestly exceeded our expectations, coming in at 211K new jobs versus our forecast for 205K.  Economist consensus expectations were even lower at 200K jobs for November.

Commuters on a sunny day walking across a bridge toward a city center on their way to work. [1]There was also a bonus net upward revision of 35K jobs for September and October payrolls that brings the three-month average of monthly job creation to 218K. U.S. job growth is clearly back on track with monthly job gains almost back to the 12-month average monthly gain of 239K. This re-acceleration in job growth follows a brief slump in U.S. job creation earlier this fall.

Overall a solid payroll report that reveals widespread job creation across many sectors, though most of those new jobs still come from private services (+163K) and construction (+46) businesses.  Mining (-11K), manufacturing (-1K) and information (-12K) (motion picture and sound recording) businesses lost net jobs in November.

The U.S. unemployment rate held steady at 5.0% as more people re-entered the labor force.  The labor force participation rate increased to 62.5% in November from 62.4% in October.

Earning growth continued at a decent pace in November. Average hourly earnings growth increased on the month 0.2%, with the year-on-year gain in average hourly earnings at 2.3%.  We expect even better earnings growth in 2016 as the U.S. labor market continues to tighten.

Bottom line: It’s hard not to like today’s reading on the November U.S. labor market.  While there are clearly pockets of weakness in manufacturing and mining, job losses do not appear to be spilling over significantly into other sectors of the economy, and do not alter our outlook for the U.S. economy or interest rate hikes from the Federal Reserve later this month and into 2016.  We can anticipate further improvement in the U.S. unemployment rate next year with continued progress on bringing discouraged and underemployed workers fully back into the labor force.


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