 | Nonfarm Payrolls Increased 211,000 in November |
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| Posted Under: Data Watch • Employment |
Implications: Another batch of solid figures on the labor market all but seals the deal that the Federal Reserve will (finally!) start raising short-term interest rates on December 16. Payrolls increased 211,000 in November and were revised up for both September and October. Meanwhile, civilian employment, an alternative measure of jobs that includes small business start-ups rose 244,000 while the unemployment rate remained 5.0% and the labor force grew 273,000. Notably, payrolls at home builders spiked up 32,000 for the month, the largest increase in residential construction for any month since 2005. We expect continued strong gains in home building jobs in the year ahead as that sector continues to ramp up activity. Moreover, workers' earnings continue to move higher. Average hourly earnings rose 0.2% in November and are up 2.3% versus a year ago. (Remember, this measure excludes irregular bonuses/commissions and fringe benefits, and given rising health care costs is probably understating the growth in employment costs.) And although total hours worked slipped slightly in November itself, they were revised up substantially for October. As a result, total hours worked are up 1.9% versus a year ago and total wages are up 4.2% in the past year, more than enough to support further increases in consumer spending. Despite the good news, we fully expect some analysts to dwell on any negative information they can find. This month, that's likely to be a 137,000 increase in part-time jobs. However, the household survey, where that data comes from, is very volatile from month to month and part-time jobs are still down 455,000 from a year ago. Because of the monthly gain in part-timers, the U-6 unemployment rate, what some analysts call the "true" unemployment rate because it includes discouraged workers and part-timers who say they want full-time work, rose to 9.9% from 9.8% in October. However, the U-6 rate was 11.4% a year ago and peaked at 17.1% in 2009-10, so even the U-6 rate is down substantially in the past several years. Although it ticked up to 62.5% in November, the labor force participation rate remains very low, a reflection of retiring Boomers, too easily available disability benefits, and overly generous student aid. The bottom line is the trend in payroll growth remains just north of 200,000 and should expand about 2.5 million in 2016, enough to keep the Fed raising rates at least a few times next year.
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