Strong US jobs growth puts Fed on track to raise interest rates

The government says November brought some more hiring, with employers adding 211,000 jobs.

Unemployment rates remain at a 7 1/2 year low, holding steady at 5%.

The November jobs report is scheduled for release today, providing a last key bit of economic data for the Fed before a policy meeting on December 15-16 that may see the first U.S. interest rate increase in a decade. “A solid job gain of 211,000 following sizable upward revisions in the prior two months boosted the average job gain over the past three months to a respectable 218,000, the best showing since July”, said Doug Duncan, chief economist with Fannie Mae.

Fed Chair Janet Yellen struck an upbeat note on the economy when she testified before lawmakers on Thursday, describing how it had largely met the criteria the United States central bank has set for the Fed’s first rate hike since June 2006.

Raising rates in December would allow the Fed to tighten policy gradually while inflation, now too low, rises to a 2-percent target smoothly, he said.

According to the U.S. Labor Department, U.S. payrolls rose in November beyond the Fed’s expectations and hourly earnings should hit 2.6 percent this month. Retailers, health- care providers and leisure and hospitality companies added jobs at a healthy, but slower pace than in October.

In addition, jobs gains registered in the last two months were revised up.

The resoundingly jobs report was the definitive evidence the Fed needed. Of those marginally attached workers, 594,000 were counted as discouraged workers, those not looking for work because they didn’t think that there were jobs available – the same as a year earlier. For the year, wages are up a steady but unspectacular 2.3 percent.

Auto sales, meanwhile, jumped to a 14-year high in November. Industry analysts expect auto sales to total a record 17.5 million for 2015.

The November jobs report showed that the U.S. unemployment rate stood unchanged at 5pc.

Americans are eating out more often, driving restaurant sales much higher.

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 Nasdaq composite increased 104.74 points, or 2.1 percent, to 5,142.27.

Even with strong hiring over the past year, wage growth has remained perhaps the job market’s biggest weakness since the recession ended.

A Fed rate hike typically results in increases in interest rates on mortgages, auto loans and other borrowing, although those increases might not occur immediately.