Job growth of 228,000 signals robust U.S. economy
The Labor Department released its official hiring and unemployment figures for November on Friday morning, providing the latest snapshot of how strong the economy continues to be:
228,000 jobs were added last month. Wall Street economists had expected about 200,000, according to Bloomberg.
The unemployment rate was 4.1 percent, unchanged from October, when it was the lowest since 2000.
Average earnings rose by 5 cents an hour and are up 2.5 percent over the past year.
The job market is the strongest it’s been in a decade, and arguably the strongest since 2000. The United States has now added jobs for 86 consecutive months — a downward blip in September was later revised to show a small gain — and the unemployment rate is lower than it ever got during the last boom, which ended when the housing bubble burst. Even wage growth, long the weak spot in an otherwise strong recovery, is showing signs of picking up.
“It’s a really, really strong economy,” said Tom Gimbel, chief executive of LaSalle Network, a staffing firm in Chicago. “Companies really want to take advantage of the economy, so they want to hire and get while the getting’s good.”
A White House statement on the jobs data pointed to both accomplishment and anticipation, with congressional Republicans on the verge of passing a $1.5 trillion tax cut plan that President Trump could sign into law this month.
Declaring that “President Trump’s bold economic vision continues to pay off,” it added, “With tax reform moving quickly through Congress, confidence in the strength of our economy remains high and families around the country are reaping the benefits.”
Economists expect the bill to provide at least a modest lift to the economy — but they aren’t sure that’s a good idea. With unemployment so low and the economy fundamentally
healthy, a tax cut could lead the economy to overheat, pushing up inflation and forcing policymakers at the Federal Reserve to raise interest rates faster than planned.
“It’s a very poorly timed fiscal stimulus,” said Joseph Song, an economist at Bank of America. “It kind of raises the risk of a boom-bust cycle.”
Job growth has gradually slowed since 2014, when the U.S. economy added close to 3 million jobs. But hiring remains remarkably steady. Employers are on track to add about 2 million jobs in 2017, a solid pace eight years into an economic expansion. The hurricanes that hit Texas and Florida in September led to a brief slowdown, but hiring quickly bounced back.
Economists aren’t sure how long the growth can continue. The unemployment rate is approaching the level many economists consider “full employment” — the point at which essentially everyone who wants a job can find one. But the unemployment rate may not fully reflect the number of available workers. The labor force participation rate — the share of adults working or actively seeking work — has been edging up in recent years, a slight dip in October notwithstanding. That suggests that a wealth of job opportunities could be drawing people into the workforce.
“I think there is a bit more slack to be burnt off,” Song said. “There are still people on the sidelines that are looking to come back to the labor market.”
The slow pace of wage growth has been a mystery in recent months. The increase in average hourly earnings is barely enough to keep up with inflation.
Most economists expect wage growth to pick up as the unemployment rate falls. Other measures of earnings have already shown modestly faster gains, and there are signs that businesses are feeling pressure to raise pay. For the first time in six years, chief executives surveyed by the Business Roundtable, a coalition of big corporations, reported that labor expenses were their biggest cost pressure in the fourth quarter.
“With the unemployment rate this low and with just not enough people coming back into the workforce to fill positions, firms are having to resort to offering higher wages,” said Joseph Brusuelas, chief economist of RSM, a financial consulting firm.
Policymakers at the Federal Reserve have sent clear signals that they plan to raise the benchmark interest rate at their meeting next week. It would probably have taken a nearly catastrophic jobs report to change that — and Friday’s report was far from catastrophic.
Friday’s report could, however, affect the Fed’s plans for next year. Economists expect the Fed to raise rates three times in 2018. But if the unemployment rate continues to fall — and especially if wages rise more quickly — Fed officials could feel pressure to raise rates faster to head off inflation.
The report could also have political implications. Trump has frequently cited strong jobs numbers as evidence that his economic policies are working. Most economists are skeptical that presidents have much influence over the economy. But with Trump nearing the end of his first year in office, the report could take on symbolic importance.