US labour sur­vey shows job gains

Weekend Argus (Saturday Edition) - - BUSINESS - LU­CIA MU­TIKANI

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

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