The jobs picture brightened in November as hiring was stronger than expected and the unemployment rate fell to a 5-year low, data that increases the likelihood that the Federal Reserve will begin easing its stimulus efforts sooner, rather than later.
Still, many observers cautioned the encouraging figures from the Labor Department Friday don't necessarily mean the central bank will act when policy-makers meet later this month. A move early next year, they said, is the most likely scenario.
While the 203,000 jump in payrolls in November is an improvement over the 158,000 a month rate of hiring that prevailed in the summer, it is not much better than the 198,000 level in the first nine months of 2013.
'We think the chance of tapering this month has risen, but on balance we expect the Fed to wait a bit longer,' said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
While the return of hundreds of thousands of federal employees following October's government shutdown may have exaggerated the move in the unemployment rate for November, the continuing payroll gains suggest the economy has picked up momentum very recently.
In November, the jobless rate dropped to 7 percent. Economists surveyed by Bloomberg before the Labor Department announcement had expected an increase of 185,000 jobs, with the unemployment rate falling by 0.1 percentage point to 7.2 percent.
Payrolls are tracked using data gathered from employers, while the unemployment rate is based on a separately survey of households.
On Wall Street, the monthly report on the labor market is by far the most closely watched economic indicator, but the November data created more anticipation than usual.
That's because the Federal Reserve seems poised to begin slowly easing back on its stimulus efforts. While the move had been expected in September, it was put off amid mixed economic data instead of the sustained signs of improvement policy makers want to see. The delay by the central bank caught Wall Street off guard three months ago.
But the spate of recent positive data, economists said, could bolster the case for the Fed to start pulling back in the coming months. . The latest figures on hiring follow more robust data for economic growth and jobless claims on Thursday and a report on Monday showing increased activity at factories.
While welcome news for job seekers, a healthier labor market is likely to be viewed more warily by investors and traders, at least in the short term.
Stronger economic growth and employment gains should bolster corporate earnings and therefore stocks over time, but speculators fear a quick Fed tapering could sap the stock market's recent momentum. The Standard & Poor's 500-stock index is up more than 25 percent in 2013. In premarket trading after the Labor Department data came out, stocks were higher.
Although the holiday shopping season seems to have gotten off to a mixed start, the retail sector added 22,000 jobs last month. Manufacturers, a sector that is closely watched as a bellwether for the broader economy, hired 27,000 workers. And the overall participation rate rose 0.2 percentage point to 63 percent, reversing a decline in recent months.
Even as the overall unemployment rate fell, the situation does remain desperate in some pockets of the labor market.
For example, the unemployment rate among workers aged 16 to 19 remains above 20 percent. And for workers with less than a high school diploma, the jobless rate stood at 10.8 percent.
Posted by Unknown on Friday, December 6, 2013 - Rating: 4.5
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