Strong Jobs Report Makes Rate Hike Likely

The report also pointed to the continued crisis in manufacturing, which saw a slight loss of over 1,000 jobs.

“The answer, if there is one, is in a set of policies from the government, not interest rate policies from the Federal Reserve”, Matus said.

A solid November job gain of 211,000 showed that despite weak growth overseas and struggling US factories, the USA economy appears healthy enough to withstand a Fed hike from record-low rates later this month.

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.

Over the past few months, the Department of Labor has stressed wages, which it said was “the unfinished business of this recovery”.

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 healthy jobs figures indicate that consumer spending is helping the economy surmount lingering challenges.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, jumped more than 0.75% to an intraday high of 98.62.

Americans are spending more on costly items like cars and homes.

The U.S. Federal Reserve risks losing its credibility and only adds uncertainty to the economic landscape the longer it takes to normalize policy, he said in prepared welcome remarks before “The New Normal for the U.S. Economy” forum hosted by the Philadelphia Fed.

“The employment report should remove the final doubts about a rate hike at the December meeting”.

“Job gains occurred in construction, professional and technical services and health care”, the U.S. Bureau of Labor Statistics said in a news release.

In addition, restaurants added 31,500 positions, and retailers, almost 31,000.

Traders have 80% confidence the Fed will boost short-term interest rates in the December meeting, according to CME Group’s FedWatch.

“You have an open debate between doves and hawks as to what the pace of increases should look like”, said Art Hogan, chief market strategist at Wunderlich Securities in NY, referring to the divisions within the Fed over readiness to tighten monetary policy. This is all but certain to trigger an increase in the Federal Reserve interest rates later this month, which will trigger an increase in interest rates in other loans.

Those increases typically aren’t captured in the average hourly pay data in the jobs report.

Average hourly earnings rose 2.3 percent in November from a year earlier, down from 2.5 percent in October. It’s still below the roughly 3.5 percent annual gain consistent of a strong economy. The probability of a 0.25 percent interest rate hike at the FOMC’s December 16 session, as implied by fed funds futures trading, stood at a hair under 80 percent on Thursday according to the CME’s FedWatch analysis.

“They’re going with an economy that’s doing better than what they expected”, says economist Paul Ashworth of Capital Economics. And layoffs are at very low levels.

But Zero Hedge points to another possibility – that older workers have less leverage to demand higher wages, making them more pliant employees. In fact, contingent workers – freelancers, part-time workers, self-employed workers and the like – make up more than 40 percent of the workforce, in the sense that they get the majority of their income from 1099 forms. The employment-population ratio of 77.40%, an increase of 0.19 points from last month, is the highest of the Obama Presidency, though it is still lower than every month between July 1986 and January 2009.

Dolega said wage gains are being held back by steep job cuts in mining, a category that consists mostly of oil and gas drilling and has shed 14 percent of its jobs in the past year.