A trifecta of numbers like this has been a long time coming:
U.S. hiring surged a surprising 321,000 jobs in November, far exceeding all predictions.
Average hourly wages scored the biggest gain in 17 months.
Unemployment stayed at a six-year low.
“Finally!” Dan Heckman, investment consultant at US Bank in Kansas City, said Friday after the U.S. Labor Department released the November jobs report. “We’ve finally gotten a series of numbers we’ve been hoping for.”
The department reported the biggest monthly job growth in nearly three years, with the 321,000 new jobs topping by nearly 100,000 the gain predicted by most analysts. At the same time, it revised upward by 44,000 the net job growth previously estimated for September and October.
The government also said average hourly wages rose 9 cents to $24.66, and the average work week rose 6 minutes to 34.6 hours, its highest since 2008.
The economy now has added jobs for 50 straight months — an all-time record.
Meanwhile, the unemployment rate stayed at 5.8 percent, which actually was considered good — an indicator that people were returning to the job market because they believed more jobs were available.
“It’s a wonderful Christmas present,” said Frank Lenk, senior economist at the the Mid-America Regional Council in Kansas City.
The job and wage gains generally are expected to convince the Federal Reserve that the U.S. economic recovery is finally self-sustaining enough for it to pull back economic support.
Analysts predict that the Fed, which has kept interest rates low for six years in an attempt to encourage borrowing and spending, will raise the federal funds rate in the first half of 2015.
“The hawks at the Fed are no doubt chomping at the bit to get the ball rolling,” said Lindsey Piegza, chief economist at Sterne Agee in Chicago. But she expects that the Fed’s “doves” will want several consecutive months of November-like numbers before they’re certain the job market is finally on its way to health. And that, she said, is “a feat that will not come easily.”
Nationally, job growth has averaged 241,000 a month so far this year, making 2014 likely to post the strongest annual hiring rate since 1999.
Since January, the United States has had “the best period of such sustained strong job creation for 20 years,” said Chris Williamson, chief economist at Markit.com.
Coupled with lower gasoline prices, which plummeted last month, the hiring and pay gains mean there’s more discretionary pay in the pockets of more workers. And that forecasts strong holiday retail sales — despite the decline in sales that greeted the holiday shopping season over Thanksgiving — with more big-ticket appliance and vehicle purchases, and a housing market that continues to improve.
But Lenk, the MARC economist, and other job market analysts advised caution about the overdue exuberance, particularly in markets such as Kansas City that have been growing more slowly than the national average.
“One month does not a trend make,” Lenk said. “The proof will be in the pudding when wages trend up for everyone. Companies are bidding up pay for top talent, but we’re not at full employment yet.”
Indeed, pockets of unemployment and under-employment remain, especially among minorities, young people and mid-career workers whose skills or experience don’t exactly match employers’ current needs.
Thursday’s protests by low-wage workers in Kansas City and around the country asserted that millions of U.S. workers aren’t paid enough to live on. That’s partly because the minimum wage hasn’t kept pace with inflation and partly because many entry-level retail and service workers don’t get full-time hours.
In fact, wages for more than four-fifths of Americans haven’t grown along with the rise in corporate profits and other indicators of an improved economy. Over the last 12 months, hourly pay has risen 2.1 percent, barely topping the 1.7 percent pace of inflation.
University of Maryland economist Peter Morici noted that Americans’ average real household income stands at about $52,100 today, markedly down from $56,900 in 1999.
Many economists say it’s time for businesses to add workers along with increasing compensation.
“With hours worked very high and layoff activity very low, businesses have been getting just about all they can out of their current labor force levels,” said Russell Price, senior economist for Ameriprise Financial. “Simply put, businesses are at the stage where they have to hire or risk losing out on new sales.”
At Workforce Partnership offices in Johnson, Wyandotte and Leavenworth counties, where the agency helps job hunters, executive director Scott Anglemyer said the best indicator he has for November’s strong jobs data is that “traffic in our workforce centers is down significantly over the last 12 months. … It’s simply that fewer people are looking for work.”
Among remaining job hunters, Anglemyer said, he sees some who lack employability because of inadequate skills or other factors, some who appear to be victims of age discrimination, and some who are seeking jobs “at higher pay levels or jobs that simply don’t exist anymore.”
More often, though, he said, employers are being picky to the point of unrealistic about the candidates they’ll consider.
“The skills gap we hear about is out there for certain types of positions and industries, but it’s not economy-wide like is popularly portrayed,” Anglemyer said. “Employers are looking for ideal candidates who match up with every wish list, and their expectations are unrealistically high.”
On the positive side, the November household survey showed marked improvement in the Labor Department’s highest measure of joblessness.
That measure — which includes people who are holding part-time jobs instead of the full-time employment they want, and disillusioned workers who temporarily stopped job hunting — shrank to 11.4 percent of the workforce, down from a high of 17.2 percent in 2010.
The November report also captured shrinkage in job hunters who are counted as long-term unemployed, meaning they’ve been searching for 27 weeks or more. That share has dropped by about 1.2 million over the last 12 months to represent 3 in 10 of the unemployed.
The monthly report — with the steady 5.8 percent jobless rate and a steady labor force participation rate of 62.8 percent of the working-age population — suggested that people are returning to the job market, fueled by optimism that more jobs are available.
But, “the majority of the job growth this year has been in the lower-paid sectors, and that does the overall economy little good,” Kansas City area economist Chris Kuehl said in his daily report.
That’s why the broader-based job growth scored in the past few months encourages hope, Kuehl added.
Economists generally expect a national economic growth rate of 2.5 percent for 2014, down from the 4.3 percent zip from April to September, but still a positive statistic that outshines growth in Europe and some Asian countries.
Several business and industry organizations called on Congress to work harder to sustain growth and not play political football with the economy.
“Manufacturers are counting on policymakers to focus on pro-growth measures that will keep the momentum going,” said Chad Moutray, chief economist for the National Association of Manufacturers.
Moutray suggested Congress pursue comprehensive tax reforms, long-term re-authorization of the Export-Import Bank and a check on regulations that add to manufacturers’ costs.
Political detente for the economy’s sake wasn’t forthcoming. Republican House Speaker John Boehner responded to the November jobs report with comments that emphasized that many families are still “having a tough time.”
“The president’s response has been more of the same: the same massive regulations, the same rising premiums, and the same uncertainty for manufacturers and small businesses,” Boehner said.
President Barack Obama responded to the jobs report, saying, “We’ve got an opportunity to keep up this progress if Congress is willing to keep our government open, avoid self-inflicted wounds and work together to invest in the things that support faster job growth in high-paying jobs.”
Obama said increasing exports, improving infrastructure, streamlining the tax code, reforming immigration and giving minimum-wage workers a raise were ways to keep the recovery going.
“But it’s worth it, every once in a while, reflecting on that the fact that the American economy is making real progress,” the president said.
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Healthy job growth
Typical seasonal hiring in retail, temporary help, warehousing and transportation was buoyed by net job additions across industries and occupations in November.
These sectors posted strong net gains:
Manufacturing +28,000 (the most in a year)
Health care +29,000
Business and professional services +86,000 (the most in four years)
Financial activities +20,000
Temporary help services +23,000
Transportation and warehousing +16,700
Food and drink services +26,500
These sectors showed modest net gains:
Source: U.S. Bureau of Labor Statistics