U.S. labor markets continued to show resilience in November, adding 203,000 jobs as the unemployment rate fell from 7.3 percent to 7.0 percent.
Friday’s report from the Bureau of Labor Statistics shows job growth slightly higher than last month, and the unemployment rate drifting down close to the 6 percent range — a significant milestone. The unemployment rate has not been 7 percent since late 2008.
October's report surprised analysts by tallying 204,000 new jobs, revised down to 200,000 on Friday, in a month marked by the government shutdown and debt ceiling fight. The reliability of October's report, however, was called into question because of the unusual data collection process on the part of the Labor Department, which had been partially shut down along with the rest of the government and produced the report late. This is the first time in more than a year that growth has been over 200,000 for consecutive months.
The 203,000 new jobs in November exceeded the expectations of economists, who had predicted 180,000 new jobs and the unemployment rate falling to 7.2 percent. As has been the case for much of the past year, Friday’s good news will be interpreted in light of its meaning for the Federal Reserve’s decision on whether to begin slowing the pace of its stimulus program at its next meeting, which is scheduled for Dec. 17-18.
The trends show job creation slowly picking up. Over the past three months, there have been an average of just under 193,000 jobs created each month. And in the past year, monthly job gains have averaged nearly 191,000, slightly higher than the 179,000 average (coming into Friday) since the labor market recovery began in late 2010.
Other aspects of the survey hinted at further strength.
The labor force grew by 455,000, and the participation rate rose from 62.8 to 63 percent. But those gains only partially reverse a steep fall from October. The labor force participation rate is still down from September, when it was 63.2 percent, and from a year ago. In recent months, large labor force fluctuations have made it harder to interpret the top-line results of the household survey used to calculate the unemployment rate. A broader rate of unemployment, which takes into account those forced into part-time work or only marginally attached to the labor force fell from 13.8 to 13.2 percent. In the household survey, full-time jobs increased by 652,000, while part-time jobs were up 174,000.
Average hourly earnings were up 4 cents to $24.15, and the length of the average workweek grew by 0.1 hour to 34.5 hours.
Friday's report will likely strengthen expectations that the Fed will move to reduce the size of its currently $85 billion monthly bond-buying program in December. Fed officials have consistently said that decisions about the program will depend on the economic data that comes out before the meeting. Chairman Ben Bernanke underscored that message in a speech in Washington in November, suggesting that the taper will come when the economy is clearly strong enough for the Fed to shift to relying on interest rate policies rather than quantitative easing.
Friday’s jobs report is the most important indicator the Fed will have before its meeting.