By Jeffrey Sparshott
U.S. employers hired at a steady clip in November while the
jobless rate fell to its lowest level in nine years, a broadly
upbeat performance that could mask underlying soft spots in the
labor market.
The U.S. has added more than 15 million jobs since the labor
market bottomed out in early 2010. But those gains have been uneven
across the nation and across business sectors, pushing swaths of
people to the sidelines and by many measures leaving the economy
short of prerecession norms.
"The labor market is in better shape than at any point in the
recovery," said Jed Kolko, chief economist at job site Indeed. "But
we haven't solved many of the longer-term challenges."
Even with those challenges, the latest employment report
continued a long stretch of steady improvement and suggests the
labor market is tightening, keeping Federal Reserve officials on
track to increase short-term interest rates when they meet Dec.
13-14.
U.S. employers added a seasonally adjusted 178,000 jobs in
November and the unemployment rate fell to 4.6%, the Labor
Department said Friday. While the rate was the lowest since August
2007, it reflected some people finding jobs while even more dropped
out of the workforce.
Indeed, declining participation in the labor force is one of the
nation's more worrisome economic trends, highlighting crosscurrents
that have lifted the prospects of many Americans while creating new
challenges for others.
For example, the mix of job creation has been heavily weighted
toward the service sector. Manufacturers have shed 54,000 jobs and
miners cut 87,300 in the last year. Among traditionally blue-collar
professions, construction has been perhaps the strongest with
155,000 new jobs in the last 12 months.
But the much larger professional and business-services sector --
everything from computer-systems design to temp workers -- added
571,000 jobs and health care created 407,000 in the same span.
Express Employment Professionals added 38 full-time staff over
the past year -- including tech, risk compliance and customer
service workers -- and is looking to hire about 20 more at its
Oklahoma City headquarters. To attract and retain employees, the
staffing-services firm regularly reviews wages, with some
departments recently receiving an annual bump of 7% to 9%, and has
added new benefits to its compensation package. One of the latest
is a payment of $5,000 per dependent to help cover childcare
costs.
"It's certainly the right thing to do," Chairman and CEO Bob
Funk said. "And companies that have good benefits...attract some
better people. Not only that it helps us retain. It's a two-pronged
benefit to the company."
Restaurants have added nearly a quarter-million jobs in the past
year. With the labor market getting tighter for service workers,
some are able to quickly advance.
Alexa Valentin was recently hired at &pizza's Philadelphia
location after a five-month job search that included a stint on
welfare. A promotion and a raise to $12.50 from $10.50 an hour
followed in less than a month, allowing her to transition off
public assistance and begin renting an apartment for her and her
daughter.
"My last two paychecks are the most I have ever gotten paid,"
the 25-year-old said. "It helped me. I have a little spare money to
treat myself and my daughter."
More broadly, wage gains across the U.S. have been outpacing
inflation, though they stumbled last month.
Average hourly earnings for private-sector workers declined 3
cents from October, or 0.1%, to $25.89 in November. Earnings were
up 2.5% from a year earlier, a step down from October's 2.8%, which
was the strongest annual wage growth since June 2009.
A broad measure of unemployment and underemployment, which
includes those who have stopped looking and those in part-time jobs
who want full-time positions, was 9.3% in November, down from 9.5%
the prior month and the lowest level since April 2008. The rate
averaged 8.3% in the two years before the recession.
"It's a solid report that has a couple of weak spots," said Gus
Faucher, deputy chief economist at PNC Financial Services.
Friday's employment report was the last to be released before
the Fed's Dec. 13-14 meeting. Policy makers are expected to raise
the central bank's benchmark interest rate for only the second time
in a decade.
Fed officials last raised the rate in December 2015 and before
that in June 2006. But with the labor market nearing full
employment and inflation showing signs of firming, another
quarter-point move appears likely.
A slowdown in hiring, meanwhile, wouldn't be unexpected for a
labor market nearing full employment -- when there is a rough match
between people who want a job and employers who need a worker.
Job gains have averaged 180,000 a month so far this year, down
from 225,000 during the same 11-month stretch in 2015.
Fed Chairwoman Janet Yellen a year ago said the economy needs to
add "under 100,000 jobs per month" to absorb new entrants into the
labor force and adding about 200,000 would be enough to draw
workers off the sidelines.
In addition to labor-market data, Fed officials will gauge
inflation, which has been firming but remains below the central
bank's 2% target, broader market movements, expectations for fiscal
policy and other factors.
In one notable development, bond yields have surged since the
election of Donald Trump due in part to expectations for more
government spending during his administration. While rising rates
can reflect optimism about the economy, they also make it more
expensive to borrow and could eventually slow growth.
Mr. Trump is set to take office amid the longest uninterrupted
stretch of hiring on record. It also appears he will inherit one of
the lowest jobless rates of any incoming administration since World
War II. By comparison, the headline rate was 3.9% when George W.
Bush was elected in 2000 and 6.8% when Barack Obama won office in
2008.
Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com
(END) Dow Jones Newswires
December 02, 2016 16:30 ET (21:30 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.