United States unemployment rate holds steady at 5 pct. in November

The Labor Department’s revised job growth for September and October was up by a combined 35,000.

The unemployment rate held at a 7½-year low of 5.0 percent, as people returned to the labor force in a sign of confidence in the jobs market.

Fed funds futures contracts imply a 79-percent chance that the Fed will end seven years of near-zero interest rates when it wraps up its December meeting and about even odds of a second rate hike by March.

In spite of the big increase in payrolls, growing participation should allow the Fed to stick to its strategy and “normalize rates gradually”, Neil Dutta, head of US economics at Renaissance Macro Research in NY, said in a note to clients.

This week, Fed Chair Janet Yellen said the economy appeared to be improving enough to justify a rate hike as long as no major shocks undermined growth before the Fed meets December 15-16.

“We won’t be at full employment until we see durable acceleration of wage growth, and only once we have achieved full employment will all workers be able to get the jobs they need and the hours they want, and be better positioned to negotiate for higher pay”, said Elise Gould, senior economist at left-leaning Economic Policy Institute.

The healthy jobs figures indicate that consumer spending is helping the economy surmount some lingering challenges. CEO Tiger Tyagarajan says Genpact has added about 400 people to its 4,000 person USA workforce this year, many of them in highly skilled areas such as software programming and management consulting.

The overall job growth in November is promising, but the lack of significant manufacturing growth reflects economic uncertainty.

The trade deficit rose in October as exports hit a three-year low.

Further gains are expected in construction payrolls.

Because interest-rate changes affect the economy with a lag, central bankers can’t afford to wait until inflation is approaching unsafe levels before acting. Anecdotal evidence, as well as data on labor-related costs, suggest that tightening job market conditions are starting to put upward pressure on wages. Purchases of existing homes have increased almost 4 percent from a year ago.

“Raising rates this year will… serve to reduce monetary policy uncertainty and to keep the economy on track for sustained growth with price stability”, added Harker, who does not gain a vote on the central bank’s policy-setting committee until 2017 under a Fed rotation. That reflected an increase in part-time workers.

Employment gains in November were likely broad-based, though manufacturing and mining probably lost more jobs.

Oilfield services provider Schlumberger this week announced another round of job cuts in addition to 20,000 layoffs already reported this year.

But the oil industry continues to be buffeted by low oil prices that have led companies to scale back drilling. September’s gain was raised to 145,000 from 137,000.

Manufacturer shed 1,000 jobs in November, the third decline in four months, as the strong dollar, soft global economy and energy-sector woes take a toll.

It followed a fresh spurt by the dollar overnight that had sent gold sliding to a new 5-1/2-year low and other commodity and emerging markets tumbling back again.