US Unemployment Rate Holds at 5.0% on Solid Job Creation

A strong showing by the labor market was the last requirement for a planned interest rate hike by the Federal Reserve, the first in almost a decade.

Federal Reserve Chair Janet Yellen, speaking the day before a key employment report, said the USA economy needs to add fewer than 100,000 jobs a month to cover new entrants to the workforce, setting an implicit floor for the jobs growth policymakers want to see.

Professional services added 27,000 jobs and government payrolls increased 14,000 last month.

The gain of 211,000 in November shows the consistency of this year in jobs gains as the average for all of 2015 is 210,000. The September job growth figure was also revised upward by 7,000 to 145,000. A separate report from the U.S. Commerce Department on Friday showed the global trade deficit widened in October as exports hit a three-year low. The government said 298,000 new jobs were created in October instead of 271,000.

Economists expected a falloff in November, but the job growth exceeded expectations of about 190,000 net new positions.

“As the Fed considers the first rate hike since March 2006, this jobs report will surely bolster the argument for an increase in mid-December”, he says. Average hourly earnings climbed 0.2%, lower than the 0.4% reported for October, but still registering a healthy 2.3% year-over-year gain.

The labor force participation rate- the share of working- age people who are employed or looking for work – rose to 62.5 percent from 62.4 percent. The unemployment rate held steady at 5 percent.

A Fed rate hike typically results in increases in interest rates on mortgages, auto loans and other borrowing, although those increases might not occur immediately. “We can anticipate further improvement… next year”, said Scott Anderson, chief economist at Bank of the West in San Francisco.

“The message from November’s jobs is clear: The U.S. labor market is unambiguously strengthening”, Neil Dutta, head of U.S. economics at Renaissance Macro Research, told MarketWatch. Since the 2008 financial collapse, near-zero or zero interest rates have been a critical component of the efforts to funnel trillions of dollars into the markets, inflating stock values even as the real economy remains mired in crisis. “Mining and information lost jobs”. Wages are up 2.3 percent from one year ago, less than the increase in the cost of living. In addition, some oil and gas companies have announced layoffs that will not be implemented until 2016 or beyond, so it’s fair to say the industry may see more job losses next year until the market bounces back.