2016 Better for FED Rate Hike — IMF Official

USA job growth likely remained solid in November in a show of the economy’s resilience, which could pave the way for the Federal Reserve to raise interest rates this month for the first time in almost a decade.

The Labor Department revised up previous two months’ job gains, with the employment gains in September and October combined 35,000 more than previously reported.

The economy expanded at a modest 2.1 percent annual rate in the July-September quarter.

“This is a green light, from our perspective”, said Phil Orlando, chief equity strategist at Federated Investors.

November’s jobs report appears to have sealed the deal for an interest rate hike in 2015, the economy apparently growing so quickly that the Federal Reserve will feel the need to slow it down some.

Trader Gregory Rowe, right, works on the floor of the New York Stock Exchange, Friday, Dec. 4, 2015.

Payroll estimates of 91 economists ranged from gains of 130,000 to 275,000 after a previously reported 271,000 October increase.

Federal funds futures contracts imply a 79% chance that the Fed will end seven years of near-zero interest rates at its December meeting and about even odds of a second rate rise by March.

And job gains were broad-based across the economy in November.

“They’re back at work at jobs that have a higher than average hourly wage”, says Patrick O’Keefe, former deputy assistant secretary for the Department of Labor, now director of economics at CohnReznick accounting and consulting. Employers have now added a robust average of 213,000 jobs a month over the past six months.

Construction payrolls increased 46,000 last month, the largest gain since January 2014.

There still is little prospect, however, that the over-reliance on central banks as an elixir for the economy will give way to the broader policy response needed to ensure that growth is sufficiently high, sustainable and inclusive. Over the past 12 months, these industries have added 85,000 jobs and 71,000 jobs, respectively.

So yes, the part-time explosion in November could be ominous, but it would be a reversal of the trend so far this year.

Earlier this week, Yellen said the process of rate increases could be gradual but she has yet to spell out what gradual means.

Besides the strong job gains, the average hourly pay also edged up compared with its level a year ago, with average hourly earnings rising 4 cents to 25.25 US dollars in November. That lowered the year-on-year reading to 2.3pc from 2.5pc in October.

This week, Fed Chairwoman Janet Yellen and other top Fed officials made clear that a rate increase was imminent unless the economic data went wildly awry.

It “will be a testament…to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession”, Yellen said. “In a lot of ways, we’re back to the good old days”.

Mining has been walloped by low oil prices, shedding 11,000 jobs last month.

Restaurants and bars added 32,000 jobs; retail, 31,000; professional and technical services, 28,000; and health care, 24,000. Importantly, the revisions for the last two months’ numbers were positive, with October’s already blockbuster tally going up to 298K from 271K.