The U.S. economy added 215,000 jobs in November, bouncing back from two months of weak employment growth triggered by Hurricanes Katrina...
The U.S. economy added 215,000 jobs in November, bouncing back from two months of weak employment growth triggered by Hurricanes Katrina and Rita.
The payroll gain was the biggest since July and almost five times the October increase, the Labor Department said Friday. The unemployment rate held at 5 percent, in line with the average over the past decade.
Increased hiring may fuel stronger consumer spending and keep the Federal Reserve raising rates to head off a quickening of inflation, economists said. Workers earned 3.2 percent more last month than in November 2004, the biggest year-over-year increase since March 2003, suggesting wage gains may lead companies to raise prices.
“We’re back in very good shape,” said Richard DeKaser, chief economist at National City in Cleveland, who predicted a 219,000 gain. “We’re right at full employment, and the fact we’re seeing compensation gains reinforces that. This is what’s going to continue to motivate the Fed to raise rates.”
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“This is one more piece of evidence suggesting the economy has very strong momentum,” said Nariman Behravesh, chief economist at Global Insight, who predicted the November gain.
Economists forecast payrolls would rise by a median 210,000 last month.
September’s jobs figure was revised to a 17,000 gain from an 8,000 decline, and October’s was lowered to 44,000 from 56,000. The hurricanes triggered a surge in energy prices that temporarily discouraged companies outside the Gulf Coast region from hiring.
Service industries, which include retailers, banks and government agencies, added 165,000 jobs last month after a decline of 10,000 in October. Manufacturers created 11,000 jobs after a 15,000 gain in October, the biggest consecutive increase since May 2004. Economists expected the number of factory jobs to rise by 5,000, according to the Bloomberg survey.
The improved jobs picture follows a report this week that showed the economy grew at a faster than expected 4.3 percent annual rate from July through September, a quarter that included the two hurricanes. Consumer spending, which accounts for about 70 percent of the economy, expanded at a 4.2 percent annual rate.
Retailers, who typically hire more workers during November to prepare for holiday sales, added 8,500 jobs last month, about three times more than in October. Temporary-help agencies added 5,200 workers.
“I would look for retailers to be possibly hiring a few more people in the last stretch and to stretch the hours of existing employees just to cover additional sales,” said Dan Butler, vice president of retail operations for the National Retail Federation.
Employment at construction firms increased 37,000. Construction jobs may rise further as rebuilding from Hurricanes Katrina, Rita and Wilma continues in the Gulf Coast and Florida.
“It shows hurricane recovery boosted jobs-growth above trend,” said Ellen Beeson Zentner, an economist at Bank of Tokyo-Mitsubishi in New York. “If you took out the construction and factory jobs created by the hurricane recovery, you would probably come in at trend growth of about 180,000.”
Higher oil and gasoline prices as a result of Katrina and Rita may have weighed on some companies’ ability to hire. The number of continuing jobless claims filed in the week ended Nov. 19 was close to the one-year high of 2.87 million in the week ended Sept. 23.
General Motors and Ford announced job cuts last month that may hurt manufacturing payroll reports in coming months.
Income data was mixed. Workers’ average hourly earnings rose to 3 cents to $16.29, a 0.2 percent increase that matched the median forecast. Compared with a year ago, weekly earnings were up 3.2 percent.
“You see companies now beginning to dust off employee retention programs,” Carl Camden, president and chief operating officer of Kelly Services, the second-largest U.S. temporary-employment agency. “It’s still relatively easy to find employees, but it’s tightening.”