By Thomas Cooley and Peter Rupert
The BLS released the November Employment Situation Report and it continued to show a robust economy that added +266,000 new jobs last month. Further, job growth for the past two months was revised upwards by +41,000 jobs. The end of the GM strike boosted employment in the auto sector by +41,300, but job growth was widespread and robust. There was a +60,200 increase in health care and social assistance.
Average weekly hours stayed at 34.4 for the fourth consecutive month. Average hourly earnings across all private non-farm jobs increased slightly and year on year average hourly earning increased by 3.1%. This is modest given the tightness in the labor market but well above PCE inflation.
In the household survey the BLS announced that the labor force participation rate fell from 63.3 to 63.2. Importantly, the participation rate for prime age workers (25-64) remained at 82.8%, its highest level sine 2009. The employment to population ratio remained unchanged last month.
The strong job market and steady wage improvement should continue to support the consumer spending that has kept the economy growing steadily. As with recent history, there is nothing evident here to support continued Fed easing at the next FOMC meeting. But recent Fed decision making seems to have been driven more by the view that the neutral rate of interest – the rate that supports the economy at full employment and maximum output without inflation – has fallen significantly. Nonetheless the market would be surprised by further Fed easing in the near future given the strength of the US labor market.
