IMF Official: 2016 Better for FED Rate Hike

The Labor Department on Friday reported the US gained 211,000 jobs last month, with jobs figures for October and September nudged higher as well.

With the November report, the average monthly increase in jobs over the past 12 months is 237,000, and the number of officially unemployed people has fallen by 1.1 million.

The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, rose to 62.5 percent from a near 38-year low of 62.4 percent.

Employment gains for October and September, meanwhile, were revised up by a combined 35,000, the report added.

Health care employment increased by 24,000 over the month, following a large gain in October (+51,000). The Fed’s first rate rise, expected to be 25 basis points, will start what is expected to be a slow cycle of policy tightening that may see rates remain below normal for years to come.

Janet Yellen, the chairwoman on the central bank, indicated the increase was likely to be agreed on at the December meeting of the Federal Open Market Committee.

Employment in November was spurred by the biggest increase in construction hiring since January 2014. Overall, our economy has created 8.1m jobs over the past thirty-six months, the fastest pace since 2000.

Bond traders are also likely to keep an eye on the results of the Treasury Department’s auctions of three-year and ten-year notes and thirty-year bonds. Early trading in the bond market shows traders think a rate hike is coming: The yield on the two-year Treasury rose to almost 1% – a level it hasn’t reached in roughly five years.

“There’s nothing in the details that suggests anything other than a healthy and rapidly growing labor market”, said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.

A rate hike later this month would also establish more certainty among investors and end speculation on the timing of the first rate hike, which has contributed to increasingly volatile stock markets.

The rate of unemployment remained unchanged from October at 5%. The unemployment rate is 5 percent, down from its 10 percent peak in 2009.

The unemployment rate held at a seven-year low of 5.0 percent, and job creation numbers for the previous two months were revised upward, more indication that the U.S. economy remains strong despite the global slowdown. Through the summer, many experts anticipated an October rate hike.

But aside from trade-sensitive industries and the oil patch, the largely insulated USA economy is faring reasonably well. Wages are up 2.3 percent from one year ago, less than the increase in the cost of living.

Friday’s report offered signals that the labor market continues to firm.

Friday’s job report would have had to have been a “disaster” for the Fed to delay raising interest rates, said economists.

Employment gains in November were broad-based, though manufacturing shed 1,000 positions and mining lost 11,000 jobs. Over the year, construction has added 259,000 jobs.