Fed’s Bullard urges U.S. rate hike; worries about globally low rates

The services sector will likely account for the bulk of the increase in employment, but retail and courier payrolls are a wild card as company are now starting their holiday hiring a bit earlier than in prior years.

The jobs report was released just a day after Ms. Yellen told federal regulators that the USA economy finally met the criteria the Fed wanted for an interest rate rise.

Analysts said it was near certain that the Fed, after keeping policy on hold for months awaiting more evidence of economic strength, would undertake its first rate increase in more than nine years at its upcoming meeting.

“To simply provide jobs for those who are newly entering the labour force probably requires under 100,000 jobs per month”, with anything above that helping “absorb” those who are unemployed, discouraged or had dropped out of the labour market”, Ms Yellen, who was speaking before Congress’ Joint Economic Committee, said in a question and answer session.

Friday’s report is the last before the Federal Reserve meets on 15-16 December to determine whether it should raise interest rates.

In November, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $25.25, following a 9-cent gain in October. That lowered the year-on-year reading to 2.3 percent from 2.5 percent in October.

Pay gains last month were modest.

“The Fed says its actions are data-dependent, and this (jobs report) is a piece of data that argues for a rate increase”, Mayland said. Its key policy rate has been 0-0.25 percent since the depths of the financial crisis in late 2008. “Things like the unemployment rate, they’re at levels which historically were consistent with a healthy, robust economy and labor market”.

Health care employers added another 24,000 employees for the month and 470,000 for the year.

The unemployment rate was unchanged at 5.0 percent, the lowest level in seven years and down from 5.8 percent a year ago, as the USA economy continues to fend off the drag from the slowdown in the global economy.

The economy in the USA created over 211,000 new jobs during November, reported the US government on Friday.

Once again, the biggest gain was in restaurant and bar jobs, with an increase of 31,500.

With China and other emerging economies decelerating, the US – the epicenter of the financial shock wave that hit the world – has become the only real driver of the global economy. Still, commodity traders have had more than a month to price in a rate hike, as a host of Fed members telegraphed the increasing likelihood of lift-off throughout November.

USA stock markets rose significantly on Friday, with the Dow Jones Industrial Average trading 240 points higher. The construction sector added 46,000 jobs in November, with more than half the gain from specialty trade contractors such as roofers and masonry workers. Factories shed 1,000 jobs. A hike would start to normalize monetary policy, closing the curtain on years of nontraditional measures, including the country’s first foray into quantitative easing.

Since the recession ended, average hourly pay has grown at only about two-thirds of the pace typical of a healthy economy. “A sustained pickup would likely signal a diminution of labor market slack”, Yellen said in a speech in NY this week.

Manufacturing has been crippled by a strong dollar, efforts by businesses to reduce bloated inventory and spending cuts by energy companies scaling back well drilling and exploration in response to sharply lower oil prices. The average workweek, however, dipped to 34.5 hours from 34.6.

Steady job gains this year and low mortgage rates have also boosted home sales, though sales have leveled off in recent months.

“I didn’t have my degree”, she said.