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215,000 new jobs in November; let the good times roll again!
It looks like the American economy is back on track after the hurricanes. US payrolls were up 215,000 in November.
US economy generates 215,000 jobs in November
By Christopher Swann in Washington
Published: December 2 2005 13:40 | Last updated: December 2 2005 14:35
US employment grew by a robust 215,000 in November, reinforcing expectations that the Federal Reserve may be forced to continue tightening interest rates into 2006.
The increase was in line with expectations.
Wage growth however, remained sluggish, with hourly rates rising by just 0.2 per cent over the month. The weakness of wage increases has been a persistent concern for economists. With US consumers already saving so little, most believe that further increases in consumer spending will have to be driven by wage rises. The salary figures in the employment report covers workers in non-supervisory or production jobs, around 80 per cent of the population.
The increase in hourly wages had risen by 0.5 per cent in October. Another big increase might have led to some worries about the prospects for wage-led inflation.
At 3.2 per cent year-on-year in November, wage increases are still lagging behind inflation, which has been around 4 per cent. But it is looking increasingly likely that wages growth will start to catch up with inflation over coming months. A sharp fall in gasoline prices is expected to take around 1 percentage point off headline inflation in November.
After the surprisingly hawkish minutes of the November meeting of the Federal Reserve’s Open Market Committee, some economists had argued that an end to the rate rising cycle was now in sight. The Federal Reserve has been pushing interest rates higher for the past 12 meetings in order to return monetary policy to a neutral setting - one that neither contributes nor detracts from growth.
The minutes signalled that this task was almost complete. But if economic data remains strong, the Federal Reserve may feel it necessary to move rates close to a more restrictive stance, in order to ensure that inflationary pressures remain contained.
“This is the first clean reading on employment we have had since the hurricane season distortions and it is pretty encouraging. It adds to evidence that the US weathered the hurricanes pretty well,” said Nigel Gault, head of US research at Global Insight. “Had we seen a weak number this would have made it more likely that the Fed would take a break from rate rising after the next 2 meetings. They are likely to want to see a few more months of clean post-hurricane data before making up their minds.”
The unemployment rate remained stable at 5 per cent.
Meanwhile, Alan Greenspan, Fed chairman, on Friday pointed to the economy’s robust performance, but he warned about the federal budget.
“The US economy has delivered a solid performance thus far in 2005. And, despite the disruptions of Hurricanes Katrina, Rita, and Wilma, economic activity appears to be expanding at a reasonably good pace as we head into 2006,” Mr Greenspan said in a speech to the Federal Reserve Bank of Philadelphia Policy Forum.
But he added: “The positive short-term economic outlook is playing out against a backdrop of concern about the prospects for the federal budget over the longer run. To be sure, the current pace of the ramp-up in spending on defence and homeland security is not expected to continue indefinitely. But, as the latest projections from the Administration and the Congressional Budget Office suggest, our budget position will substantially worsen in the coming years unless major deficit-reducing actions are taken.”
The Labor Department said on Friday that the construction sector gained 37,000 jobs in November with a large increase in heavy and civil engineering construction. The gains partly reflect rebuilding and clean-up efforts following Hurricane Katrina, the bureau said. Employment in the industry has been on an upward trend for more than 2-1/2 years.
Food services - which includes restaurants and bars - added 39,000 jobs in November. This followed declines in the previous 2 months that totaled 69,000. For the 12 months ending in August, the industry had gained 283,000 jobs.
Manufacturing employment edged up in November. Job gains occurred in wood products and in computer and electronic products, while machinery manufacturing employment fell.
Total employment, at 142.6m, and the civilian labour force, at 150.2m, were little changed in November. The employment-population ratio also was little changed over the month at 62.8 percent, and the labour force participation rate held at 66.1 per cent.
By Christopher Swann in Washington
Published: December 2 2005 13:40 | Last updated: December 2 2005 14:35
US employment grew by a robust 215,000 in November, reinforcing expectations that the Federal Reserve may be forced to continue tightening interest rates into 2006.
The increase was in line with expectations.
Wage growth however, remained sluggish, with hourly rates rising by just 0.2 per cent over the month. The weakness of wage increases has been a persistent concern for economists. With US consumers already saving so little, most believe that further increases in consumer spending will have to be driven by wage rises. The salary figures in the employment report covers workers in non-supervisory or production jobs, around 80 per cent of the population.
The increase in hourly wages had risen by 0.5 per cent in October. Another big increase might have led to some worries about the prospects for wage-led inflation.
At 3.2 per cent year-on-year in November, wage increases are still lagging behind inflation, which has been around 4 per cent. But it is looking increasingly likely that wages growth will start to catch up with inflation over coming months. A sharp fall in gasoline prices is expected to take around 1 percentage point off headline inflation in November.
After the surprisingly hawkish minutes of the November meeting of the Federal Reserve’s Open Market Committee, some economists had argued that an end to the rate rising cycle was now in sight. The Federal Reserve has been pushing interest rates higher for the past 12 meetings in order to return monetary policy to a neutral setting - one that neither contributes nor detracts from growth.
The minutes signalled that this task was almost complete. But if economic data remains strong, the Federal Reserve may feel it necessary to move rates close to a more restrictive stance, in order to ensure that inflationary pressures remain contained.
“This is the first clean reading on employment we have had since the hurricane season distortions and it is pretty encouraging. It adds to evidence that the US weathered the hurricanes pretty well,” said Nigel Gault, head of US research at Global Insight. “Had we seen a weak number this would have made it more likely that the Fed would take a break from rate rising after the next 2 meetings. They are likely to want to see a few more months of clean post-hurricane data before making up their minds.”
The unemployment rate remained stable at 5 per cent.
Meanwhile, Alan Greenspan, Fed chairman, on Friday pointed to the economy’s robust performance, but he warned about the federal budget.
“The US economy has delivered a solid performance thus far in 2005. And, despite the disruptions of Hurricanes Katrina, Rita, and Wilma, economic activity appears to be expanding at a reasonably good pace as we head into 2006,” Mr Greenspan said in a speech to the Federal Reserve Bank of Philadelphia Policy Forum.
But he added: “The positive short-term economic outlook is playing out against a backdrop of concern about the prospects for the federal budget over the longer run. To be sure, the current pace of the ramp-up in spending on defence and homeland security is not expected to continue indefinitely. But, as the latest projections from the Administration and the Congressional Budget Office suggest, our budget position will substantially worsen in the coming years unless major deficit-reducing actions are taken.”
The Labor Department said on Friday that the construction sector gained 37,000 jobs in November with a large increase in heavy and civil engineering construction. The gains partly reflect rebuilding and clean-up efforts following Hurricane Katrina, the bureau said. Employment in the industry has been on an upward trend for more than 2-1/2 years.
Food services - which includes restaurants and bars - added 39,000 jobs in November. This followed declines in the previous 2 months that totaled 69,000. For the 12 months ending in August, the industry had gained 283,000 jobs.
Manufacturing employment edged up in November. Job gains occurred in wood products and in computer and electronic products, while machinery manufacturing employment fell.
Total employment, at 142.6m, and the civilian labour force, at 150.2m, were little changed in November. The employment-population ratio also was little changed over the month at 62.8 percent, and the labour force participation rate held at 66.1 per cent.
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