Strong US jobs report points to Fed rate hike

WASHINGTON (AFP) – Strong hiring across the US economy in November lent fresh support Friday to the Federal Reserve embarking on a long-awaited series of interest rate hikes later this month.

Analysts said it was near certain that the Fed, after keeping policy on hold for months awaiting more evidence of economic strength, would undertake its first rate increase in more than nine years at its upcoming meeting.

While the strong November employment data hid some signs of naggingly persistent slack in the market, Fed Chair Janet Yellen made clear this week she believes that will slowly dry up as the economy continues to grow, and was no barrier to a rate increase.

''The November jobs report was the last hurdle for a December Fed rate hike,'' said Nariman Behravesh, chief economist at IHS Global Insight in a note. With the new data, ''a rate hike at the December 15-16 Fed meeting is (almost) a sure thing.''

''The Fed will raise rates in December and data are now being watched primarily to determine how quickly rates rise next year and beyond,'' echoed Chris Low, economist at FTN Financial.

The US economy pumped out 211,000 new jobs last month, and the previous two months were significantly better than previous estimates, the Labor Department reported.

The unemployment rate was unchanged at 5.0 percent, the lowest level in seven years, as the economy continues to fend off the drag from the slowdown in the global economy.

A broad range of industries were expanding payrolls at a strong pace: construction, retail trade, finance, education and health, business services, and restaurants and hotels.

Even government, long a weak spot in hiring, joined in with 14,000 net new positions.

There were still weaknesses in the report: average wage gains remain slow; the ratio of working age people participating in the labor force is historically very low; and the number of people forced to take part-time jobs increased by 319,000 to a still-large 6.1 million.

But overall the report indicated a firming of the jobs market and a resilience in growth that would allow the Fed to begin raising its benchmark federal funds rate after keeping it locked near zero for seven years, economists said.

With the November report, the US has added and average 237,000 new jobs each month in the past year, and the number of officially unemployed people has fallen by 1.1 million.

Fed Chair Janet Yellen twice this week expressed confidence that the US economy is growing strongly enough to justify raising the federal funds rate, which has been stuck at 0-0.25 percent since December 2008 to support a rebound from the Great Recession.