Payrolls rise by 178,000; jobless rate dips to 4.6%

Graphs showing The monthly net change in nonfarm payroll employment and the monthly unemployment rate for 2016.
Graphs showing The monthly net change in nonfarm payroll employment and the monthly unemployment rate for 2016.

WASHINGTON -- U.S. employers added a solid 178,000 jobs in November and the unemployment rate fell to a nine-year low of 4.6 percent, though mainly because many people stopped looking for jobs and were no longer counted as unemployed.

Friday's report from the Labor Department reflected a resilient job market that is helping drive the U.S. economy. Job gains have averaged 180,000 a month this year -- more than enough to lower the unemployment rate over time.

The report paves the way for the Federal Reserve to raise short-term interest rates at its next meeting this month, said Jason Schenker, president of Prestige Economics. "It also tops off a recent run of continually positive economic data," he said.

Still, sluggish pay increases and a decline in the number of Americans either working or seeking work point to longer-term challenges for the economy.

"A solid report but not quite as good as the headline numbers would indicate," said Gus Faucher, deputy chief economist at PNC in Pittsburgh. "There's mixed news there."

Last month, average hourly pay slipped after a strong gain in October. Wages have risen only about 2.5 percent over the past year, about a percentage point less than is typical in a healthy economy.

The number of unemployed fell by 387,000 to 7.4 million, lowering the joblessness rate from 4.9 percent. But only about a third of that drop occurred because people found work. The rest reflected a decline in people looking for jobs. The government doesn't count people as unemployed unless they're actively looking for work.

"The labor market is still healthy and perhaps operating at or beyond capacity," said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. "Wages can be volatile month to month. I'd tend to put a little more weight on the unemployment rate when thinking about future developments and wage inflation."

The task of slicing the unemployment rate in half from its recession high of 10 percent has taken seven years.

"This is not something that happens overnight," said Jonas Prising, chairman and chief executive of the ManpowerGroup, one of the largest recruiters in the United States and abroad.

The number of part-time workers who would prefer full-time work dropped last month. That helped lower an alternative gauge of unemployment, which includes involuntary part-time workers and discouraged would-be workers, to 9.3 percent, the lowest level since 2008. Still, that figure remains above pre-recession levels.

Factories shed 4,000 jobs in November, construction companies added 19,000 jobs, and professional and business services, which include high-paying positions in accounting and engineering, gained 63,000.

Retailers cut 8,300 jobs, an unexpected loss as the Christmas shopping season gets underway. The decline suggests that retailers don't expect a huge rush of consumer traffic.

Stephen Stanley, chief economist at New York-based Amherst Pierpont Securities LLC, said in a note that he was skeptical that retail employment was truly falling because of widespread reports that stores "hired aggressively and earlier than usual this year for the Christmas season."

"The labor market has gotten tight," Stanley wrote. Much of the recent wage volatility came among salaried workers, whose hourly pay is tougher to measure, and "I know that wages in the real world are accelerating," so the data "could be related to weather, seasonality, or purely random noise," he said.

Online and catalog retailers stepped up hiring, as more shopping migrates to the Internet. Department stores and clothiers cut jobs.

Overall, fewer than 60 percent of adults have jobs -- 3 percentage points lower than when the recession began in late 2007. In part, that trend reflects retirements by the nation's huge baby-boomer group. But it also means hiring hasn't kept up with population growth. And seven years into the recovery, pay growth is still below healthy levels.

Nearly every economic report since November's election has pointed to accelerating growth -- the key reason why the Fed is considered certain to raise short-term interest rates this month.

Americans bought homes in October at the fastest pace in nearly a decade and their willingness to make such a major purchase reflects growing optimism. In fact, according to the Conference Board, Americans are more confident in the economy than at any other point in the past nine years.

They are spending more, too. Solid consumer spending helped propel the nation's economic growth to a 3.2 percent annual rate in the July-September quarter, the best showing in two years.

By one measure, nationwide home prices have fully recovered and are even slightly above the level they reached in 2006, before the housing bubble burst.

That steady rise in home prices has increased Americans' household wealth and helped lift their overall finances. And even as consumers are spending more, pay is rising enough to enable more savings: Americans saved 6 percent of their after-tax income in October, up from 5.7 percent in September.

Information for this article was contributed Christopher S. Rugaber of The Associated Press, by Patricia Cohen of The New York Times and by Shobhana Chandra of Bloomberg News.

A Section on 12/03/2016

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