Employers add 178,000 to payrolls in November
Data, including 9-year low jobless rate, point to Trump inheriting growing labor market.
WASHINGTON — Solid job gains and a nine-year low unemployment rate in November put the Federal Reserve on track for an interest rate hike this month and indicate that President-elect Donald Trump will inherit a steadily growing labor market — although one that still needs some key improvements.
The U.S. economy added 178,000 net new jobs last month while the unemployment rate fell three-tenths of a percentage point to 4.6%, the lowest since 2007, the Labor Department said Friday.
The performance virtually assures that Fed policymakers will nudge up the central bank’s benchmark short-term interest rate when they meet Dec. 13-14, providing a long-awaited validation that the economy is making significant progress.
That means Trump is likely to take office with far fewer economic challenges than Obama faced eight
years ago.
In November 2008, the unemployment rate had risen to 6.8% on its way to 10% nearly a year later, the highest since 1983.
And in the midst of the Great Recession, the U.S. shed 769,000 net jobs the month Obama was elected — near the midpoint of 23straight months of overall job losses.
“He’s obviously inheriting a much better economy that what Obama took over from George W. Bush,” Mark Hamrick, senior economic analyst at financial information website Bankrate.com., said of Trump.
“At this point, it’s more about trying to address long-festering issues,” Hamrick said.
Those issues were just below the surface of Friday’s jobs report.
The 0.3 percentage point drop in the unemployment rate — the steepest in more than two years — was in large part because nearly 450,000 people dropped out of the labor market.
It was the secondstraight month the labor force shrank, highlighting a persistent problem of the recovery from the Great Recession: many Americans, particularly prime-aged men, aren’t even looking for work.
The percentage of Americans at least 16 years old who were employed or seeking jobs — the labor force percentage rate — ticked down to 62.7% in November. That’s near the lowest level since the late 1970s.
“This jobs recovery has really been a slow-moving parade and it’s left literally millions of Americans as bystanders in its shadow,” said Patrick O’Keefe, economic research director at accounting and consulting firm CohnReznick and a former Labor Department official under President Reagan.
In another discouraging sign, wage growth reversed in November after mostly strong gains in recent months.
Average hourly earnings slipped by 3 cents to $25.89, the first decline in nearly a year, after jumping by 11 cents in October. Still, the figure was up a solid 2.5% for the 12 months ended Nov. 30, above the rate of inflation.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the surprising drop in wages could be a statistical anomaly caused by a calendar quirk — the payday for people paid semi-monthly fell after the Labor Department conducted its survey.
He said he expected “a hefty rebound” in wage growth in December.
Economists have been hoping for sustained wage growth, which would help workers catch up for ground lost during the recession.
And though November’s drop in earnings could just be an anomaly, it highlighted that the economy is still not at full health, said Douglas Holtz-Eakin, president of the conservativeleaning American Action Forum think tank.
“There’s no near-term threats. There’s not a looming recession or anything like that that would require a dramatic response,” he said, noting the contrast to the economy Obama faced.
But Holtz-Eakin said Trump still will inherit “a fundamentally underperforming economy that has a poor long-term outlook and that needs to be fixed.”
November’s job growth — an improvement from October’s downwardly revised 142,000 figure — was right about average for 2016.
The economy has added a monthly average of 180,000 net new jobs this year, down from an unusually strong 229,000 monthly average in 2015.
Last month’s job gains were fueled by professional and business services, construction and healthcare.
Professional and business services companies expanded their payrolls by 63,000, up from 48,000 in October. Construction firms added 19,000 net new jobs in November, up from 14,000 the previous month.
And the healthcare sector expanded employment by 28,000, up slightly from 27,000 in October.
Those gains were partially offset by continued weakness in manufacturing, which shed 4,000 jobs in November after losing 5,000 the previous month.
Jason Miller, a spokesman for the Trump transition, noted Friday that last month’s manufacturing figures bring the total jobs lost in that sector during the Obama administration to more than 300,000.
Miller touted the announcement this week that Carrier was keeping 1,100 jobs in Indiana instead of moving them to Mexico, a decision made after appeals from Trump and Vice President-elect Mike Pence.
Steep manufacturing job declines began around 2001 and bottomed out in 2010. Since then, the industry actually has gained more than 800,000 jobs.
Fed Chairwoman Janet L. Yellen and other central bank officials have indicated a small rate hike was coming this month as long as the labor market and broader economy continued to improve. Last week, the Commerce Department reported that the economy grew faster in the third quarter of the year than initially estimated. The 3.2% annual rate of growth was the strongest pace in two years.
Analysts forecast solid growth of about 3% for the fourth quarter. That has combined with expectations of large tax cuts and federal infrastructure spending by the incoming Trump administration, which would fuel more growth as well as inflation, to lead investors to strongly believe that the Fed would hike its benchmark interest rate this month.