BLBG: Payrolls in U.S. Surge by Most Since Early 2012 as Wages Pick Up
Employers in the U.S. added 321,000 jobs in November, the most since January 2012, driving wage gains and highlighting increased corporate confidence the economy will endure a weakening in global markets.
The advance in payrolls exceeded the most optimistic projection in a Bloomberg survey of economists and followed a 243,000 gain in October that was stronger than previously reported, figures from the Labor Department showed today in Washington. The jobless rate held at a six-year low of 5.8 percent. Average hourly earnings rose 0.4 percent, the biggest gain since June of last year.
Persistent job growth that’s generating income gains and stoking demand increases the likelihood of employment opportunities for even more Americans. The improvement in the labor market will probably help assure Federal Reserve policy makers that the world’s biggest economy is strong enough to withstand an increase in borrowing costs next year.
“The labor market continues to be strong and healthy,” Kathleen Bostjancic, a financial-market economist at Oxford Economics in New York, said before the report. As the “payroll numbers continue at a healthy clip and wages pick up, hours are decent -- you have that trifecta -- that puts pressure on the Fed to raise rates sooner rather than later.”
Job growth was broad-based last month, with factory payrolls rising the most in a year and professional and business services taking on the largest number of workers since November 2010. Hiring at retailers also picked up.
Economists’ Forecasts
The median forecast in a Bloomberg survey of economists called for a 230,000 increase in November after a previously reported 214,000 gain in October. Estimates of 100 economists ranged from increases of 140,000 to 306,000. November marked the 10th straight month employment has increased by at least 200,000, the longest such stretch since the 19 months that ended in March 1995.
To calculate the data, the Labor Department surveys businesses and households for the pay period that includes the 12th of the month.
The so-called participation rate, which indicates the share of working-age people in the labor force, held at 62.8 percent in November.
Employment in business and professional services climbed 86,000 last month, while payrolls rose by 28,000 at factories. Retail employment increased by 50,200 in November, the most this year.
Transportation Jobs
Transportation and warehousing payrolls climbed 16,700 last month, boosted by a 4,700 gain at couriers and messenger services as companies including United Parcel Service Inc. (UPS) began hiring for the holidays.
Last year, “both UPS and FedEx were understaffed going into the Christmas season,” Raymond Stone, an economist at Stone & McCarthy Research Associates, wrote in a Dec. 2 note to clients. “This resulted in disruptions in delivery services including a higher incidence of late deliveries. These companies have taken steps not to let that happen again this year.”
UPS, the world’s biggest package delivery company, had planned to hire as many as 95,000 people to help deliver 585 million packages in December.
Today’s report showed average hourly earnings rose 0.4 percent to $24.66 in November from $24.57 the prior month. They were up 2.1 percent over the past 12 months.
Hours Worked
The average work week for all employees increased six minutes to 34.6 hours. A longer workweek often amounts to greater take-home pay for many workers.
Economists surveyed by Bloomberg from Nov. 7 to Nov. 12 projected the economy would add an average 225,000 jobs per month this year. That compares with an average of 194,250 in 2013 and 186,330 the previous year.
Yelp Inc. (YELP), a service for online restaurant and local business reviews, is among those hiring. The San Francisco-based company said it hired about 200 salespeople in the third quarter in addition to the 100 it brought on in the prior period. At the end of last year, Yelp had 1,984 employees.
“What we’re really doing is preparing ourselves for the future by hiring so many folks now and making sure that they are productive,” Chief Financial Officer Robert Krolik said at a Nov. 21 industry conference. “And if for some reason economically things turn around or do something different, all you have to do is slow down the hiring process.”
Federal Reserve
The Fed is monitoring labor market improvement as they consider when to raise borrowing costs for the first time since 2006. The next meeting of the Fed’s Open Market Committee is Dec. 16-17, and a majority of policy makers forecast they will start raising interest rates at some point next year.
A Fed survey earlier this week showed broad-based job growth across industries and regions.
“Employment gains were widespread,” the central bank said Dec. 3 in its Beige Book business survey, which is based on reports gathered on or before Nov. 24. “A number of districts also noted that contacts remained optimistic about the outlook for future economic activity.”
The steady progress in the job market, along with falling gasoline prices, has brightened consumers’ spirits. With fuel prices at a four-year low and still dropping, Americans are flocking to auto dealerships.
Auto Sales
Motor vehicle sales rose to a 17.1 million annualized rate in November, the second-highest level since January 2006, according to data from Ward’s Automotive Group.
“By any measure households are reaping significant disposable income gains each week at current gas prices,” Emily Kolinski Morris, chief economist at Ford Motor Co., said on a Dec. 2 conference call. “Importantly younger, and lower income households are now seeing improved personal financial condition in part due to lower energy prices.”
Continued job growth will probably also be welcome news for the housing industry, which has shown uneven progress this year.
“We think that we’re still in the early stages of the recovery,” Brent Anderson, vice president of investor relations at Scottsdale, Arizona-based Meritage Homes Corp., said at a Nov. 20 conference. “The underlying drivers of demand -- which are population growth, job growth, affordability, household formations -- are strong arguments for that growth to continue.”
To contact the reporter on this story: Victoria Stilwell in Washington at vstilwell1@bloomberg.net
To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.net Vince Golle
