Jimmetta Smith, of Lithonia, Ga., right, the wife of a U.S. Marine veteran, holds her resume while talking with Rhonda Knight, a senior recruiter for Delta airlines, at a job fair for veterans and family members in Marietta, Ga. last month.
ASSOCIATED PRESS Enlarge
WASHINGTON — The U.S. job market is proving sturdier than many had thought.
Solid job growth in November cut the U.S. unemployment rate to 7 percent, a five-year low. The surprisingly robust gain suggested that the economy may have begun to accelerate. As more employers step up hiring, more people have money to spend to drive the economy.
Employers added 203,000 jobs last month after adding 200,000 in October, the Labor Department said today. November’s job gain helped lower the unemployment rate from 7.3 percent in October. The economy has now added a four-month average of 204,000 jobs from August through November, up from 159,000 a month from April through July.
“It’s hinting very, very strongly that the economy is starting to ramp up, that growth is getting better, that businesses are hiring,” said Joel Naroff, president of Naroff Economic Advisors.
The job growth has also fueled speculation that the Federal Reserve will scale back its economic stimulus when it meets later this month.
It “gives the Fed all the evidence it needs to begin tapering its asset purchases at the next ... meeting,” said Paul Ashworth, an economist at Capital Economics.
The unemployment rate has fallen nearly a full percentage point since the Fed began buying bonds in September 2012 and hit 7 percent earlier than most analysts expected.
In June, Chairman Ben Bernanke suggested that the Fed would end its $85 billion monthly purchases after the unemployment rate reached 7 percent. The Fed’s bond purchases have been intended to keep borrowing rates low.
Bernanke later backed away from the 7 percent target. He cautioned that the Fed would weigh numerous economic factors in any decision it makes about its bond purchases. Many economists still think the Fed won’t begin to cut back until January or later.
While the Fed weighs its options, U.S. employers may finally be gaining the confidence, 4½ years after the recession officially ended, to ramp up hiring.
In addition to the solid job gain drop in unemployment, the November employment report offered other encouraging signs:
— Higher-paying industries are adding more jobs. Manufacturers added 27,000 jobs, the most since March 2012. Construction companies added 17,000. The two industries have created a combined 113,000 jobs in the past four months.
— Average hourly wages rose 4 cents to $24.15. They have risen just 2 percent in the past year. But that’s ahead of inflation: consumer prices have risen 0.9 percent over that time.
— Employers are giving their workers more hours: The average work week rose to 34.5 hours, up from 34.4. A rule of thumb among economists is that a one-tenth hourly increase in the work week is equivalent to adding 300,000 jobs.
— Hiring was broad-based. In addition to higher-paying industries, retailers added 22,300 jobs, restaurants and bars and hotels 20,800. Education and health care added 40,000. And after years of cutbacks, state and local governments are adding jobs again. In November, governments at all levels combined added 7,000.
Still, the report contained some sour notes: Many Americans are still avoiding the job market, neither working nor looking for work. That’s one reason the unemployment rate has fallen in recent months. The percentage of adults who are either working or searching for jobs remains near a 35-year low.
And America’s long-term unemployed are still struggling to find jobs. More than 4 million people have been out of work for six months or longer. That figure was essentially unchanged in November. By contrast, the number of people who have been unemployed for less than six months fell.
Among companies that are ramping up hiring is Eat24, which handles online restaurant deliveries. Eat24, based in San Francisco, expects this month to hire 10 to 15 salespeople, mobile application developers and data analysts, on top of its 150-person workforce.
“The economy is picking up a little bit,” said Amir Eisenstein, chief marketing officer for the company. “In the last couple of years, the mobile market has boomed.”
Today's jobs report follows other positive news. The economy expanded at an annual rate of 3.6 percent in the July-September quarter, the fastest growth since early 2012, though nearly half that gain came from businesses rebuilding stockpiles. Consumer spending grew at its slowest pace since late 2009.
But if hiring continues at its current pace, a virtuous cycle will start to build: More jobs typically lead to higher wages, more spending and faster growth.
That said, more higher-paying jobs are needed to sustain the economy’s momentum. Roughly half the jobs that were added in the six months through October were in four low-wage industries: retail; hotels, restaurants and entertainment; temp jobs; and home health care workers.
Consumers have been willing to spend on big-ticket items. Autos sold in November at their best pace in seven years, according to Autodata Corp. New-home sales in October bounced back from a summer downturn.
But early reports on holiday shopping have been disappointing. The National Retail Federation said sales during the Thanksgiving weekend — probably the most important stretch for retailers — fell for the first time since the group began keeping track in 2006.
Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Comments that violate these standards, or our privacy statement or visitor's agreement, are subject to being removed and commenters are subject to being banned. To post comments, you must be a registered user on toledoblade.com. To find out more, please visit the FAQ.