The final jobs report of the calendar year points to an economy entering 2016 with solid tailwinds that should help knock down the unemployment rate further next year.
Employers added a better than expected 211,000 new jobs in November and the jobless rate held steady at 5 percent, the Labor Department said Friday.
“Job growth is strong and steady,” said Mark Zandi, chief economist of Moody’s Analytics. “Full employment is fast coming into view.”
Here are three important takeaways:
Job growth broad
Economists cheered both the revisions to October numbers and hiring gains across most sectors. October’s strong 271,000 number was revised upward, with the government now saying it was actually 298,000. It means there is momentum in the jobs market into 2016.
“The U.S. labor market is unambiguously strengthening,” said Neil Dutta, head of U.S. economics for Renaissance Macro Research in New York.
The unflappable health care sector added almost 24,000 jobs, retailers gearing up for the holidays added almost 31,000. The white-collar professional and business-services sector notched another 27,000. Leisure and hospitality, which captures both the weekend spending of consumers and the stepped-up business travel, created another 39,000 posts last month.
In the 12 months prior to November, employment growth averaged 237,000 per month.
Keith Hall, commissioner of the Bureau of Labor Statistics
Leading all sectors, however, was construction. Its recovery, tied to housing, has lagged most areas of the economy and now seems to be hitting stride with 46,000 new positions in November.
The only real laggards last month were the manufacturing sector, hammered by the strong U.S. dollar, which makes U.S. goods more expensive, and mining. Oil field work is classified under mining, and the collapse in energy prices have resulted in large layoffs. The mining sector shed another 11,300 jobs in November, while manufacturing shrunk by 1,000 posts.
The party holding the White House tends to benefit when the economy is strong. Absent unforeseen events on the global stage, the economy is expected to further improve next year. Hiring is solid and accelerating as the nation readies to select a new president.
“The jobs data are good news for the Democratic nominee for president. The job market will be back to full strength by Election Day,” predicted Zandi.
The White House basked in the solid numbers, with the Jason Furman, chairman of the Council of Economic Advisers, highlighting wage growth and job creation.
“Our businesses have now added 13.7 million jobs over 69 straight months, extending the longest streak on record,” Furman wrote in his White House blog.
Republicans who were quick to pounce on past bad jobs reports offered more subdued criticism in their read of the November jobs report.
“The labor force participation rate remains near a 38-year low, and millions of workers in their prime earning years are either out of work or underemployed,” said Sen. Dan Coats, R-Ind., chairman of the Joint Economic Committee of Congress.
Two solid months of hiring gives the Federal Reserve room later this month to finally raise its benchmark interest rate for the first time in almost a decade. The action, expected on Dec. 16, is dubbed “liftoff,” since it will begin a slow years-long upward climb in lending rates across the economy.
The federal funds rate influences the cost for borrowers of taking out a longer-term loan for a home, car or college tuition. This key benchmark rate has been anchored near zero since December 2008 during the Great Recession.
It might seem counterintuitive, but it’s good that lending rates are going up. It means the Fed thinks the economy is strong enough to absorb higher borrowing costs.
“The bottom line: The November report ensures that the Fed will move at the December meeting,” said Douglas Holtz-Eakin, a prominent conservative economist and former director of the Congressional Budget Office.
November by the numbers
Professional and business services, up 27,000
Manufacturing, down 1,000
Leisure and hospitality, up 39,000
Health care, up 23,800
Construction, up 46,000
Temporary help services, down 12,300
Transportation and warehousing, up 6,400
Retail, up 30,700
Financial services, up 14,000
Government jobs, up 14,000