Jobless rate plunges to 4.6%, employers add 178K jobs
Washington — U.S. employers added a solid 178,000 jobs in November, reflecting the steady economy President-elect Donald Trump will inherit. The unemployment rate hit a nine-year low of 4.6 percent, though mainly because many people stopped looking for jobs and were no longer counted as unemployed.
Friday’s report from the Labor Department reflected a resilient job market that is helping drive the U.S. economy. Job gains have averaged 180,000 a month this year — more than enough to lower the unemployment rate over time.
The pace of hiring keeps the Federal Reserve on track to raise short-term interest rates at its next meeting in less than two weeks.
“This jobs report paves the way for Fed rate hikes,” said Jason Schenker, president of Prestige Economics. “It also tops off a recent run of continually positive economic data.”
Still, sluggish pay increases and a decline in the number of Americans either working or seeking work point to longer-term challenges for the economy that Trump will face.
Those same challenges bedeviled President Barack Obama and might have helped lead millions of voters to choose Trump over Hillary Clinton.
Last month, average hourly pay slipped after a strong gain in October. Wages have risen only about 2.5 percent over the past year — about a percentage point less than is typical in a healthy economy.
The number of unemployed fell by 387,000 to 7.4 million, lowering the jobless rate from 4.9 percent. But only about a third of that drop occurred because people found work. The rest reflected a decline in people looking for jobs. The government doesn’t count people as unemployed unless they’re actively looking for work.
The drop in the number of people working or seeking work appeared to be concentrated among white men, a group that helped form the core of Trump’s support.
More positively, the number of part-time workers who would prefer full-time work dropped last month. That helped lower an alternative gauge of unemployment that includes involuntary part-time workers and discouraged would-be workers, to 9.3 percent, the lowest since 2008. Still, that figure remains above pre-recession levels.
Factories shed 4,000 jobs in November, more than offsetting the roughly 800 jobs that heating and air conditioning manufacturer Carrier said it would keep in Indiana after Trump criticized the company for planning to move them to Mexico.
Construction companies added 19,000 jobs, and professional and business services, which includes high-paying positions in accounting and engineering, gained 63,000.
Retailers cut 8,300 jobs, an unexpected loss as the holiday shopping season gets underway. The decline suggests that retailers don’t expect a huge rush of consumer traffic.
But online and catalog retailers stepped up hiring, as more shopping migrates to the internet. Department stores and clothiers slashed jobs.
Overall, fewer than 60 percent of adults have jobs — 3 percentage points lower than when the Great Recession began in late 2007. In part, that trend reflects retirements by the nation’s many baby boomers. But it also means hiring hasn’t kept up with population growth. And seven years into the recovery, pay growth is still below healthy levels.
Many of these trends — particularly the drop in the proportion of adults with jobs — emerged years before Obama took office. Trump’s challenge will be to try to reverse them.
He may get some help from the economy’s upswing: As employers continue hiring amid low unemployment, they will likely be forced to offer higher pay. Thicker paychecks, in turn, may draw more people who aren’t either working or seeking a job to begin looking again. And businesses may offer more hours to their part-time workers.
There is evidence — such as last month’s solid wage gain — that these trends have begun to take hold, though progress has been slow.
Still, nearly every economic report since the election has pointed to accelerating growth - key reason why the Fed is considered certain to raise short-term interest rates this month.
Americans bought homes in October at the fastest pace in nearly a decade. Their willingness to make such a major purchase reflects growing optimism. In fact, according to the Conference Board, Americans are more confident in the economy than at any other point in the past nine years.
They are spending more, too. Solid consumer spending helped propel growth to a 3.2 percent annual rate in the July-September quarter, the best showing in two years.
By one measure, nationwide home prices have fully recovered and are even slightly above the level they reached in 2006, before the housing bubble burst.
That steady rise in home prices has boosted Americans’ household wealth and helped lift their overall finances. And even as consumers are spending more, pay is rising enough to enable more savings: Americans saved 6 percent of their after-tax income in October, up from 5.7 percent in September.