Ho-ho-HOT: November hiring sizzles
Smashing consensus expectations, employers added 321,000 jobs in November, hourly earnings surged and the unemployment rate held steady at 5.8 percent, the government said Friday in a strong monthly jobs report.
The jobs number came in about 100,000 above most mainstream economic forecasts, and the gains were across the industry spectrum.
Hiring accelerated in construction and manufacturing sectors, which have struggled to gain steam, and soared in the white-collar category of professional and business services.
“It’s hard not to get excited about this month’s number,” Jason Furman, head of the White House Council of Economic Advisers, gushed on CNBC shortly after financial markets opened up within 70 points of crossing for the first time the 18,000 threshold on the Dow Jones Industrial Average.
Statisticians at the Bureau of Labor Statistics revised upwards September and October numbers by a combined 44,000 and average hourly earnings rose by 0.4 percentage points in the month. Over the last three months, hiring has now averaged about 278,000.
“Boom. Job reports are rarely ever as strong as today's numbers,” said Mark Zandi, chief economist for Moody’s Analytics. “There were big, broad-based job gains, stronger wage growth, and more hours worked per week. The job market is in full swing.”
Friday’s jobs report overstates the economy's strength, cautioned Zandi, and job gains will most likely moderate in coming months. But if the trend line continues, he said, the economy will be back to full employment in the next 18 months.
“Workers will soon gain significant negotiating power with their employers,” said Zandi.
Wage growth, which plunged in the Great Recession, remains a laggard in an otherwise strengthening recovery.
“Private sector nominal average hourly earnings grew 2.1 percent annually in November—similar to what we’ve seen this year so far—which shows that that the labor market is still far from healthy,” Elise Gould, an economist with the liberal Economic Policy Institute, said in an analysis of the jobs report. “This lackluster wage growth is a clear indicator that there’s still considerable slack in the labor market.”
Republicans looked past the strong hiring and focused in on the wage component of the strong report.
“While it’s welcome news that more people found work last month … middle-class families across the country, including my home state of Ohio, are struggling to get by on wages that haven’t kept pace with rising cost,” House Speaker John Boehner said in a statement.
The White House was equally quick to note that more jobs have been added in this calendar year than any time since the roaring late 1990s.
“Private employment has risen by at least 200,000 for ten consecutive months, the first time that has happened since the 1990s,” said Furman, the White House adviser, said in his blog. “In addition, the average workweek in the private sector rose to 34.6 hours in November, the highest since 2008.”
The strong report is consistent with the past two quarters of economic growth. Each has been revised upward, toward or above an annual rate of 4 percent, and that suggests that the final quarter which ends Dec. 31 may equally be hot.
Add to the mix the plunge in gasoline and oil prices which have created the equivalent of a huge economic stimulus package.
Analysts were encouraged by the strength of hiring across sectors. The professional and business services sector, which encompasses better paying jobs, added 86,000 jobs in November. The hard-hit construction sector added 20,000 in a month where weather begins to weigh against hiring.
Retailers added a strong 50,200 jobs in the month as they readied for a holiday season increasingly challenged by online sales.
“Solid seasonal demand, reduced prices at the pump, and the high though erratic levels of business and consumer confidence, all are supportive of job gains,” said Jack Kleinhenz, chief economist for the National Retail Federation. “We remain optimistic that we are gaining traction to a more normal labor market in the near future which should contribute to wage and salary growth.”
Manufacturers added 20,000 in the month, and a range of other economic indicators suggest that trend will continue next year.
“These data show that the more-robust growth in new orders and output seen in other indicators are beginning to translate into healthier hiring figures,” Chad Moutray, chief economist for the National Association of Manufacturers, said in his blog Shopfloor.org. “Indeed, manufacturing leaders remain mostly upbeat in their outlook, which should bode well for hiring in the sector as we move into 2015.”
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