US labour survey shows job gains
WASHINGTON: American employers maintained a strong pace of hiring in November, but probably not strong enough for the Federal Reserve to reduce the amount of money it is pumping into the economy.
Non-farm payrolls are expected to have increased by 180 000 last month, according to a Reuters survey of economists, down from October’s gain of 204 000 jobs. The gains, however, would be above the 174 000 monthly average for the past six months.
“We are on a pretty solid trend. We are maintaining the course and job gains are continuing at a solid pace,” said Laura Rosner, an economist at BNP Paribas in New York.
The unemployment rate is forecast to slip a tenth of a percentage point to 7.2 percent as some federal workers who were counted as jobless in October returned to work after a 16-day partial shutdown of the government.
An anticipated drop in the participation rate – the share of working-age Americans who either have a job or are looking for one – is also expected to pressure the jobless rate lower in November. The rate hit a 351/2-year low in October.
“We are going to see a continuation of the trend. It’s the result of discouraged workers, those who have been unemployed for a while, dropping out as the holiday approaches and resuming their search early next year,” said Alan MacEachin, an economist at Navy Federal Credit Union in Vienna, Virginia.
“We also have the effect of end-of-year retirements,” he said.
The Labour Department will release its closely watched employment report shortly, little more than a week before the Fed’s December 17-18 policysetting meeting.
Minutes from the US central bank’s last meeting in October showed officials were preparing to scale back their monthly $85 billion bondbuying buying campaign in coming months as long as the economy continues to improve.
Economic data so far for the fourth quarter has been mixed, with labour market and consumer spending indicators firming. However, the housing market and business spending have slowed.
A stronger-than-expected reading on job growth in November could stir speculation that the central bank might reduce its current pace of bond purchases this month, but most economists feel the Fed will want further signs of economic progress before acting.
“There are still many boxes that remain unchecked. Inflation is too low, income growth is not accelerating,” said Thomas Costerg, US economist at Standard Chartered Bank in New York.
“The Fed would like to see the participation rate stabilising. The Fed is in no rush to taper and this report should not change that.”
Economists also believe the central bank will probably not want to pull the trigger before lawmakers on Capitol Hill strike a deal to fund the government.
While a few economists look for the Fed to scale back its purchases in December or January, most expect it will hold off until March, and some believe it may wait until June.
Economists expect the anticipated job gains in November to be broad-based. Government payrolls are forecast being flat, with hiring by state and local governments offsetting a decline in federal government employment.
Manufacturing payrolls are expected to rise for a fourth straight month and construction employment added to October’s gains even as the housing recovery slowed.
Retail employment is expected to increase, but a late Thanksgiving could have resulted in some of the seasonal hiring not being captured in November’s report. – Reuters