21,000 New Jobs in November – A New Boost to the U.S. Economy

The month of November saw an expanded payroll for American employers, with 21,000 new jobs added, boosting the U.S. economy further. Many are now expecting that the Federal Reserve will be raising interest rates after close to a decade. They are scheduled to meet again in mid-December.

The Labor Department also corrected the earlier estimate for job creation in September and October by an additional 26,000 jobs. However, the 5 percent unemployment rate remained as is.

Phil Orlando, Federated Investors’ chief equity strategist said that this positive news looks like a go signal that interest rates will be hiked. Wall Street was also enthused by the news, with a feeling that there wouldn’t be any uncertainty about the plan to raise interest rates. Thursday’s losses in the stock market were recovered on Friday after the report was released, increasing the yield by two percent while bonds went slightly lower.

Steady growth

The data from the Labor Department presents an economy that is steadily growing, with jobs getting created at a good pace, even if the gains in wages are still low-key and many Americans have yet to recover.

Many economists predict that increased hiring will continue next year, and if this happens, it could deaden the criticism used by the current Republican presidential candidates against the economic policies of the Democrats.

Although the 211,000 new jobs reported for November could still be revised, overall, the average monthly payroll increased by 210,000 this year, which is quite consistent with the average in 2013 (199,000) and 2014 (260,000).

The report also prompted Patrick T. Harker, the Federal Reserve Bank of Philadelphia president to join those who are voicing their thoughts that interest rates should be hiked by the central bank. He added that price stability will keep the economy stay on track and uncertainty over the monetary policy will be lessened.

Still a lot to be done

The U.S. economy had been slowly recovering from the financial crisis of 2008, and there are still many sectors that remain weak economically. Americans in the labor force are still below normal at 62.5 percent. The U.S. economy is still short of 2.8 million jobs to match the employment levels before the recession, based on the research done for the Hamilton Project of the Washington-based Brookings Institution. According to their research, even if the healthy job market continues, the gap will only be closed by the middle of 2017.

Increase in wages

Aside from monitoring the hiring and unemployment figures, the policy makers of the government are also keeping a close watch on wage increase progression. It rose by 0.2 percent in November, which raised the average earnings/hour higher by 2.3 percent for a 12-month period.

Janet L. Yellen, the chairwoman of the Federal Reserve and other Fed officials have already declared that a rate increase is clearly possible if the healthy state of the economy continues.

Image credit: Mike Groll/AP