A broad-based November hiring surge ranging from factories to offices and retailers powered the U.S. economy to the largest number of jobs created in almost three years, triggering long-awaited wage gains.
The 321,000 advance in payrolls exceeded the most optimistic projection in a Bloomberg survey of economists and followed a 243,000 gain in October that was stronger than previously reported, figures from the Labor Department showed today in Washington. The jobless rate held at a six-year low of 5.8%. Average hourly earnings rose 0.4%, the most since June of last year.
Persistent job growth that’s generating income growth and stoking demand increases the likelihood of employment opportunities for even more Americans. The improvement in the labor market will probably help assure Federal Reserve policy makers that the world’s biggest economy is strong enough to withstand an increase in borrowing costs next year.
“You’ve got this really nice dynamic going on in that there’s more jobs growth, more spending, stronger GDP growth, which in turn means more jobs being created,” said Nariman Behravesh, chief economist for IHS Inc. in Lexington, Massachusetts, and the second-best forecaster of payroll gains over the last two years, according to data compiled by Bloomberg. “It’s just a very good cycle to be in right now for the United States.”
Today’s report showed factory payrolls rose the most in a year, while professional and business services took on the largest number of workers since November 2010. Hiring at retailers also picked up.
Treasury yields and the dollar climbed after report. The yield on the benchmark 10-year note rose to 2.30% from 2.24% late yesterday. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 trading partners, gained 0.6% to 1,119.23 at 9:03 a.m. in New York. Stock-index futures were little changed.
The gain in November payrolls, the most since January 2012, exceeded the median forecast in a Bloomberg survey of economists called for a 230,000 increase in November after a previously reported 214,000 gain in October. Estimates of 100 economists ranged from increases of 140,000 to 306,000. November marked the 10th straight month employment has increased by at least 200,000, the longest such stretch since the 19 months that ended in March 1995.
Revisions to prior reports added 44,000 jobs to payrolls in the previous two months. To calculate the data, the Labor Department surveys businesses and households for the pay period that includes the 12th of the month.
The so-called participation rate, which indicates the share of working-age people in the labor force, held at 62.8% in November.
Employment in business and professional services climbed 86,000 last month, while payrolls rose by 28,000 at factories. Retail employment increased by 50,200 in November, the most this year.
Transportation and warehousing payrolls climbed 16,700 last month, boosted by a 4,700 gain at couriers and messenger services as companies including United Parcel Service Inc. began hiring for the holidays.
Last year, “both UPS and FedEx were understaffed going into the Christmas season,” Raymond Stone, an economist at Stone & McCarthy Research Associates, wrote in a Dec. 2 note to clients. “This resulted in disruptions in delivery services including a higher incidence of late deliveries. These companies have taken steps not to let that happen again this year.”
UPS, the world’s biggest package delivery company, had planned to hire as many as 95,000 people to help deliver 585 million packages in December.
Today’s report showed average hourly earnings of all workers rose 0.4% to $24.66 in November from $24.57 the prior month. They were up 2.1% over the past 12 months.
The average work week for all employees increased six minutes to 34.6 hours, the highest since May 2008. A longer workweek often amounts to greater take-home pay for many workers.
Yelp Inc., a service for online restaurant and local business reviews, is among those hiring. The San Francisco-based company said it hired about 200 salespeople in the third quarter in addition to the 100 it brought on in the prior period. At the end of last year, Yelp had 1,984 employees.
“What we’re really doing is preparing ourselves for the future by hiring so many folks now and making sure that they are productive,” Chief Financial Officer Robert Krolik said at a Nov. 21 industry conference. “And if for some reason economically things turn around or do something different, all you have to do is slow down the hiring process.”
The Fed is monitoring labor market improvement as they consider when to raise borrowing costs for the first time since 2006. The next meeting of the Fed’s Open Market Committee is Dec. 16-17, and a majority of policy makers forecast they will start raising interest rates at some point next year.
A Fed survey earlier this week showed broad-based job growth across industries and regions.
“Employment gains were widespread,” the central bank said Dec. 3 in its Beige Book business survey, which is based on reports gathered on or before Nov. 24. “A number of districts also noted that contacts remained optimistic about the outlook for future economic activity.”
The steady progress in the job market, along with falling gasoline prices, has brightened consumers’ spirits. With fuel prices at a four-year low and still dropping, Americans are flocking to auto dealerships.
Motor vehicle sales rose to a 17.1 million annualized rate in November, the second-highest level since January 2006, according to data from Ward’s Automotive Group.
“By any measure households are reaping significant disposable income gains each week at current gas prices,” Emily Kolinski Morris, chief economist at Ford Motor Co., said on a Dec. 2 conference call. “Importantly younger, and lower income households are now seeing improved personal financial condition in part due to lower energy prices.”
Continued job growth will probably also be welcome news for the housing industry, which has shown uneven progress this year.
“We think that we’re still in the early stages of the recovery,” Brent Anderson, vice president of investor relations at Scottsdale, Arizona-based Meritage Homes Corp., said at a Nov. 20 conference. “The underlying drivers of demand -- which are population growth, job growth, affordability, household formations -- are strong arguments for that growth to continue.”