WASHINGTON (AP) – The resurgence in US hiring accelerated in November and put 2014 on track to be the healthiest year for job growth since 1999.
The gain of a robust 321,000 jobs – the most in nearly three years – put further distance between a strengthening American economy and struggling nations throughout the developed world. The job market still isn’t yet fully healthy. But its steady improvement raises the likelihood that the Federal Reserve will start raising interest rates from record lows by mid-2015.
The unemployment rate remained at a six-year low of 5.8 per cent, the Labor Department said Friday.
“These were boom-like numbers,” said Mark Zandi, chief economist at Moody’s Analytics. “They indicate that the US economy is on very solid ground.”
Friday’s report also raised hopes that Americans’ pay might finally be starting to increase after barely budging since the Great Recession began seven years ago. The average hourly wage rose nine cents to $24.66, the biggest gain in 17 months.
Fed Chair Janet Yellen has cited stagnant wages as a key reason to keep rates low. Higher wages could lead to higher prices, and the Fed might feel compelled to raise rates to limit inflation.
Still, over the past 12 months, hourly pay has risen just 2.1 per cent, barely above the 1.7 per cent inflation rate. And Scott Anderson, an economist at Bank of the West, noted that inflation remains below the Fed’s two per cent target rate and will likely remain tame because of lower energy prices. That might give the Fed some leeway to wait.
The Fed has kept its benchmark rate near zero for six years to encourage more borrowing and spending.
Investors welcomed Friday’s positive news: The Dow Jones industrial average jumped 69 points in late-afternoon trading. The yield on the 10-year Treasury note rose to 2.31 per cent, from 2.25 per cent, a sign that investors likely foresee a Fed rate increase fairly soon.
So far this year, the economy has gained 2.65 million jobs. With one month to go, 2014 is already the best year for hiring in 15 years.
That is partly a reflection of the anaemic pace of hiring for much of the recovery. Only this year, five years after the recession officially ended, have job gains reached levels historically associated with a strong economy.
Even now, the job market remains far from fully recovered. There are 6.9 million people with part-time jobs, for example, who would prefer full-time work – up from 4.1 million before the recession.
And millions have given up looking for jobs. That has been a factor in the declining unemployment rate: Once people stop seeking a job, they’re no longer counted as unemployed.
A broader measure of unemployment, which includes involuntary part-time workers and people who have stopped looking for a job, stands at 11.4 per cent.
In addition, the number of unemployed people who have been out of work for more than six months is 2.8 million, more than double its pre-recession level.
“At this rate, we won’t return to pre-recession labour market health until October 2016 – nearly nine years since the recession began,” said Elise Gould, an economist at the liberal Economic Policy Institute.
Even among the Americans who have found jobs, many are earning less than they did before the recession.
One of them is Stephen Tripp, 40, who’s starting a job this month in the Minneapolis area as a cook at Aramark, a corporate food-services provider, after years of intermittent work at country clubs and restaurants. The job pays much less than the $75,000 he made as an executive chef in 2007.
“I’m kind of taking steps back in the hopes of moving forward,” Tripp said.
Hiring last month was boosted by seasonal hiring related to the holiday shopping season. Retailers added 50,200 jobs, the most in 11 months. Transportation and warehousing gained 16,700.
Shipping companies have announced ambitious plans, after some holiday gifts that were ordered online arrived late last year. UPS has said it expects to add up to 95,000 seasonal workers, up from 85,000 last year. FedEx plans to hire 50,000, up from 40,000.
But solid job growth ranged across many industries in November. A measure of industries that added jobs reached its highest point since 1998.
Manufacturers added 28,000 jobs, the most in a year, and education and health services 38,000.
Professional and technical services, a category that includes higher-paying jobs such as accountants, engineers and architects, gained 37,500 positions, the most in 3 1/2 years. Construction firms added 20,000.
The surge in hiring comes after the economy expanded from April through September at its fastest six-month pace in 11 years.