Strong US job growth sets seal on December rate hike

The November jobs report, to be unveiled later Friday, provides a last key bit of economic data for the Fed before a policy meeting on December 15-16 that may see the first USA interest rate increase in a decade.

The U.S. economy added 211,000 jobs in November, the country’s Labor Department reported Friday. In November, average hourly wages rose 2.3 percent from 12 months earlier.

The U.S. economy added 211,000 jobs in November, a solid boost that likely means the Federal Reserve will raise interest rates later this month.

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.

Due to the low inflation level, the Fed is still keeping the interest rate near zero. Spending on construction projects, including homes, roads and office towers, reached an eight-year high in October.

The economy expanded at a modest 2.1 percent annual rate in the July-September quarter. September’s gain was raised to 145,000 from 137,000.

One analyst on Wall Street said the jobs report was the green light for the Federal Reserve to proceed. Within this industry, accounting and bookkeeping services added 11,000 jobs, and employment continued to trend up in computer systems design and related services (+5,000). Their stepped-up spending has supported the USA economy and offset drags from falling oil prices and weak growth overseas. This should put to bed any doubts about whether the Fed will announce a rate increase later this month.

Separate figures also highlighted an impact to the economy from those factors, with the United States trade deficit widening in October as exports fell to their lowest level in three years.

The sizable gain in construction jobs last month, even as the Fed is preparing to raise rates, suggests that higher borrowing costs are not expected to derail homebuilding or home sales.

USA businesses have added 13.7 million jobs in a little less than six years, but White House economic advisor Jason Furman says “We have more work to do”.

Average hourly earnings for workers in the private sector increased by 4 cents an hour to $25.25 last month, after an increase of 9 cents an hour for October. The average workweek, however, dipped to 34.5 hours from 34.6.

“Prior to this data, the markets had been pricing in a high 70 per cent likelihood of a rise which will no doubt increase more now”.

The unemployment rate in November held steady at 5.0%, unchanged from October.