Call for more U.S. jobs

The U.S. added more jobs than expected in November, while the unemployment rate held at a seven-year low, solidifying thoughts that the Federal Reserve would hike interest rates later in the month. It would be the first interest rate hike in almost a decade.

The monthly report showed the USA economy added 211,000 jobs last month, with unemployment sticking at five per cent. The dollar’s reaction to the news was muted, having spiked above $1.09 against the euro, it settled back around $1.0878.

Employers added 211,000 jobs last month, led by big gains in construction and retail, the government said Friday. The Nasdaq composite increased 104.74 points, or 2.1 percent, to 5,142.27.

Friday’s strong jobs report “all but guarantees” the Fed later this month will raise its benchmark short-term interest rate above zero for the first time since 2008, according to MarketWatch.

Job gains occurred in construction, professional and technical services, and health care. Spending in that sector has reached its highest level in eight years, boosted by more homebuilding and development of more roads and infrastructure.

The labor market’s strength is evident in the data for November, which removes the final large obstacle before the decision is made by the Fed.

Meanwhile, average hourly earnings increased by four cents to $25.25, or 0.2%, following a 0.4% rise in October.

The US economy has created 8.1 million jobs over the past three years, the fastest pace since 2000.

“While this report can help justify a rate hike in December, it can’t justify anything more than a very gradual path of rate hikes”, said Brian Jacobsen, a portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. “There were fewer workers laboring part-time for economic reasons and small declines in discouraged and long-term unemployed workers”. Job growth has been solid, and wages have begun to rise, but not so much as to cause concern about future high inflation.

“In November, less than 48 percent [of the jobs created] were what we would call ‘low wage, ‘ falling steadily from its recent high of 70 percent in August”, Blitz said in an email after the jobs numbers came out. “The job market still has a lot of steam and the Fed should be comfortable raising interest rates”.

But acting after the economy added, say, just 110,000 jobs in November likely would not have been as favorable for business confidence or stocks.

Cheap oil and a strong dollar have stunted sales for drillers and export-oriented firms.

Now, many experts agree that only something economically disastrous could alter the Fed’s course to raise rates this year.