November Jobs Report Points to US Economy’s Health

The U.S. economy generated another month of solid hiring in November, making it highly likely that the Federal Reserve will raise interest rates from record lows this month.

The closely watched employment report came a day after Fed chairwoman Janet Yellen struck an upbeat note on the economy when she testified before legislators, describing how it had largely met the criteria the U.S. central bank has set for the Fed’s first rate hike since June 2006.

The Labor Department revised up previous two months’ job gains, with the employment gains in September and October combined 35,000 more than previously reported.

Another month of strong job gains would allay fears the economy had hit a soft patch, after reports showing tepid consumer spending in October and a slowdown in services industry growth in November.

The U.S. economy added 211,000 jobs in November, the Labor Department says in its new report.

Though weak global growth remains a drag, she said the U.S.is far more dependent on domestic consumption and investment which, at least so far, is strong enough to produce growth that is slightly above trend. The government bean-counters bumped up their estimates of job gains in prior months.

Now, many experts agree that only something economically disastrous could alter the Fed’s course to raise rates this year. “The job market still has a lot of steam and the Fed should be comfortable raising interest rates”.

Job creation has been averaging around 200,000 a month this year, a figure Ms Yellen said was “quite a bit” above the number needed to continue absorbing slack in the labour market. The Nasdaq composite rose 104.74, or 2.1 percent, to 5,142.27.

A Fed rate hike typically lifts interest rates for mortgages, auto loans and other borrowing, though those increases might not occur immediately.

Gold fans will hope the arrival is better than the journey as a awful run since October has seen the price drop to a six-year low and put the metal on course for a third annual decline in a row.

Average hourly earnings are forecast rising 0.2 percent after increasing 0.4 percent in October.

“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 drawn within the Fed over readiness to tighten policy. The motion-picture industry also shed 13,000 jobs, though there’s been little change in employment over the past year.

Auto sales, for example, jumped to a 14-year high in November, boosted in part by Black Friday deals offered throughout the month.

Still, a strong US dollar is weighing on USA exports and cutting factory output, while also lowering profits for USA multinational corporations.

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.