US economy adds another 211000 jobs

Buoyed by the solid news on the economy, the stock market surged to its biggest gain since early September. Some signs have suggested that wages are beginning to pick up after barely moving in the more than 6 years since the Great Recession officially ended. If more people are working it should be harder for employers to fill positions, forcing them to raise wages to fill empty jobs.

The U.S. economy added 211,000 jobs in November, and the nation’s unemployment held steady at 5 percent, according to the Labor Department.

With 211,000 jobs added in the month of November, the Federal Reserve may have just received to increase interest rates for the first time since 2008.

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.

“We will be looking, of course, carefully at tomorrow’s jobs report”, Janet Yellen, the head of the Federal Reserve, said Thursday while testifying before the US Congress joint economic committee.

Prior to the report on Friday, economists were expecting an increase of 200,000 with no rate change in unemployment.

With the number of unemployed dwindling, companies eventually should feel compelled to offer higher pay to attract and keep workers. Even some of the hawks, who would typically worry more about inflation risks than weak economic growth, are weighing a possibility that they may face a long spell of below normal economic growth and low inflation.

“A significant number of individuals now classified as out of the labor force would find and accept jobs in an even stronger labor market”, she said.

Besides the strong job gains, the average hourly pay also edged up compared with its level a year ago, with average hourly earnings rising 4 cents to 25.25 USA dollars in November.

The economy expanded at a modest 2.1 percent annual rate in the July-September quarter.

Yellen said this week that the process of rate increases could be gradual but has yet to spell out what gradual means. “It will have to be a disaster for the Fed to delay until 2016”, said Ryan Sweet, senior economist at Moody’s Analytics in Westchester, Pennsylvania. It is in a range many Fed officials see as consistent with full employment and has dropped seven-tenths of a percentage point this year.

In a speech Wednesday, Yellen conceded those weaknesses, which for some argue against raising the fed funds rate. Average monthly job creation for this year so far is now 210,000, substantially less than the average for 2014 of 260,000. Over the last 12 months, those costs are up 3 percent as businesses have to compete for fewer qualified applicants.

“However, it would now be a surprise if we didn’t see the first increase in interest rates since 2006”, Mr Mould added.