Employers added solid 211,000 jobs in November

Paul Davidson | USA TODAY

Employers added 211,000 jobs in November as the labor market turned in a solid showing for the second straight month, likely cementing a decision by the Federal Reserve to raise interest rates this month for the first time in nearly a decade.

The unemployment rate, which is calculated from a different survey, was unchanged at 5%, the Labor Department said Friday. A rise in employment was offset by an increase in the labor force, which includes Americans looking for jobs or working.

Economists surveyed by Bloomberg expected 200,000 job gains, according to their median forecast.

The report "would appear to seal an interest rate hike at the Fed's upcoming...meeting," economist Paul Ashworth of Capital Economics wrote in a note to clients.

Businesses added 197,000 jobs., driven by construction, professional technical and services, and health care. Federal, state and local governments added 14,000.

Also encouraging is that job gains for September and October were revised up by a total 35,000.

Wage growth slowed a bit after picking up sharply the previous month. Average hourly earnings rose 4 cents to $25.25 and are up 2.3% over the past 12 months, after hitting a recent peak of 2.5% in October. Pay increases have averaged a sluggish 2% for most of the recovery but economists are expecting an acceleration in the months ahead as employers boost pay to compete for fewer available workers in a tightening labor market. That would spur higher inflation and give the Fed confidence to nudge up interest rates.

The report is the most significant the Fed will assess before deciding whether to lift its benchmark rate at a pivotal meeting December 15-16. Yet after employment gains bounced back smartly from a two-month slump in October, economists said it was unlikely a weak November showing would dissuade Fed policymakers from boosting the rate, especially since the figures are often revised.

Fed Chair Janet Yellen told Congress Thursday that officials will closely examine the report but "can't overweight any particular number." She signaled that a rate increase is likely because the labor market has improved over time, with unemployment falling from 10% in 2009. And monthly job growth has averaged more than 200,000 this year.

One discouraging sign in Friday's report is that the number of part-time workers who prefer full-time jobs rose by 319,000 to 6.1 million, though the figure can be volatile from month to month and had fallen sharply in October. That pushed up a broader measure of unemployment -- that includes those workers, the unemployed as well as discouraged Americans who have stopped looking for jobs – to 9.9% from 9.8%.

Also, the average work week slipped to 34.5 hours from 34.6 hours, perhaps signaling that demand for employees could moderate in coming months.

A positive development is that construction, which lost about 2 million jobs in the real estate crash and recession, led the employment gains, with 46,000 and has added 259,000 positions the past year.

“They’re back at work at jobs that have a higher than average hourly wage,” says Patrick O’Keefe, former deputy assistant secretary for the Department of Labor, now director of economics at CohnReznick accounting and consulting.

Restaurants and bars added 32,000 jobs; retail, 31,000; professional and technical services, 28,000; and health care, 24,000.

But the oil industry continues to be buffeted by low oil prices that have led companies to scale back drilling. Employment in mining dropped by 11,000 and is down by 123,000 since December. Manufacturers, which trimmed 1,000 jobs, have been hurt by the oil slump as drilling companies cut back orders for steel pipes, and by a strong dollar that has curtailed exports.

Other recent payroll indicators have been mixed. Payroll processor ADP estimated that businesses added a healthy 217,000 jobs in November. And initial jobless claims, a proxy for layoffs, remain at low levels despite edging up in recent weeks.

But a measure of service-sector employment fell last month and consumer perceptions of job availability were dimmer.

Yet solid consumer spending and the housing recovery have underpinned payroll gains, more than offsetting industrial output that's been curtailed by a strong dollar that has hobbled exports and bolstered imports.

Paul Davidson on Twitter: @PDavidsonusat.