Solid U.S. job growth cuts unemployment to 7 percent

Rate is at a five-year low
Associated Press
Dec 7, 2013

The U.S. job market is proving surprisingly resilient.

Solid job growth in November cut the U.S. unemployment rate to 7 percent, a five-year low. The robust gain suggested that the economy may have begun to accelerate. As more employers step up hiring, more people have money to spend to drive the economy.

Employers added 203,000 jobs last month after adding 200,000 in October, the Labor Department said Friday. November's job gain helped lower the unemployment rate from 7.3 percent in October. The economy has added a four-month average of 204,000 jobs from August through November, up sharply from 159,000 a month from April through July.

"It's hinting very, very strongly that the economy is starting to ramp up, that growth is getting better, that businesses are hiring," said Joel Naroff, president of Naroff Economic Advisors.

The job growth has also fueled speculation that the Federal Reserve will scale back its economic stimulus when it meets later this month.

It "gives the Fed all the evidence it needs to begin tapering its asset purchases at the next ... meeting," said Paul Ashworth, an economist at Capital Economics.

Stock investors were heartened by the news. The Dow Jones industrial average surged nearly 178 points in early afternoon trading.

The unemployment rate has fallen nearly a full percentage point since the Fed began buying bonds in September 2012 and has reached 7 percent earlier than most analysts had expected.

In June, Chairman Ben Bernanke had suggested that the Fed would end its $85 billion in monthly bond purchases after the unemployment rate reached 7 percent. The Fed's bond purchases have been intended to keep borrowing rates low.

Bernanke later backed away from the 7 percent target. He cautioned that the Fed would weigh numerous economic factors in any decision it makes about its bond purchases. Many economists still think the Fed won't begin to cut back until January or later.

While the Fed weighs its options, U.S. employers may finally be gaining enough confidence in the economy, 4½ years after the recession officially ended, to ramp up hiring. In addition to the solid job gain and the drop in unemployment, Friday's report offered other encouraging signs:

— Higher-paying industries are adding more jobs. Manufacturers added 27,000 jobs, the most since March 2012. Construction companies added 17,000. The two industries have created a combined 113,000 jobs over the past four months.

— Hourly wages are up. The average rose 4 cents in November to $24.15. It's risen just 2 percent in the past year. But that's ahead of inflation: Consumer prices are up only 0.9 percent in that time.

— Employers are giving their workers more hours: The average work week rose to 34.5 hours from 34.4. A rule of thumb among economists is that a one-tenth hourly increase in the work week is equivalent to adding 300,000 jobs.

— Hiring was broad-based. In addition to higher-paying industries, retailers added 22,300 jobs, restaurants, bars and hotels 20,800. Education and health care added 40,000. And after years of cutbacks, state and local governments are hiring again. In November, governments at all levels combined added 7,000 jobs.

Still, the report contained some sour notes: Many Americans are still avoiding the job market, neither working nor looking for work. That's one reason the unemployment rate has fallen in recent months. The percentage of adults either working or searching for jobs remains near a 35-year low.

And America's long-term unemployed are still struggling. More than 4 million people have been out of work for six months or longer. That figure was essentially unchanged in November. By contrast, the number of people who have been unemployed for less than six months fell last month.

Among companies that are ramping up hiring is Eat24, which handles online restaurant deliveries. Eat24, based in San Francisco, expects this month to hire 10 to 15 salespeople, mobile application developers and data analysts, on top of its 150-person workforce.

"The economy is picking up a little bit," said Amir Eisenstein, the chief marketing officer. "In the last couple of years, the mobile market has boomed."

The steady decline in unemployment, from a high of 10 percent four years ago, is welcome news for the White House. But Jason Furman, President Barack Obama's top economic adviser, said the plight of the long-term unemployed points to the need to extend emergency unemployment benefits.

About 1.3 million people who've been out of work for six months or more will lose unemployment aid if a 5-year-old program to provide extra benefits expires on Dec. 28. The Congressional Budget Office has estimated the cost of an extension at $25 billion. Some Republicans on the Hill have balked at the cost.

But on Thursday, House GOP leader John Boehner said he was willing to consider extending the program.

Friday's jobs report follows other positive news. The economy expanded at an annual rate of 3.6 percent in the July-September quarter, the fastest growth since early 2012, though nearly half that gain came from businesses rebuilding stockpiles. Consumer spending grew at its slowest pace since late 2009.

But if hiring continues at its current pace, a virtuous cycle will start to build: More jobs typically lead to more pay, more spending and faster growth.

That said, more higher-paying jobs are needed to sustain the economy's momentum. Roughly half the jobs that were added in the six months through October were in four low-wage industries: retail; hotels, restaurants and entertainment; temp jobs; and home health care workers.

Consumers have been willing to spend on big-ticket items. Autos sold in November at their best pace in seven years, according to Autodata Corp. New-home sales in October bounced back from a summer downturn.

But early reports on holiday shopping have been disappointing. The National Retail Federation said sales during the Thanksgiving weekend — probably the most important stretch for retailers — fell for the first time since the group began keeping track in 2006.

Comments

There you go again

Sure employment is up....why with all those people working to get the ACA website up and running....Obama has hired "half the country" just so his web site looks good. Yep, that's where the jobs are.....

red white and blue

419 is the only one on here with any commen since! I'm tired of hearing its obama fault its bushs fault its the gov.as a whole!

Pete

"Since"? Since when..

Darwin's choice

+1

Pete

What does "commen" mean?

2cents

Smoke and mirrors to cover the health care failure and redirect your minds. I have trouble believing anything from Washington anymore, they tend to create what they want you to hear by playing with data. We know the administrations people are great at creating and manipulating data, they are very savvy and bragged about it after the election!

Contango

Re: "creating and manipulating data"

"Rogers: WH Won’t Even Give Classified Briefings on HealthCare.Gov Security Problems"

http://www.nationalreview.com/co...

There's one for ya!

Congress represents "We the People," and the oligarchs in the WH refuse to answer OUR questions regarding the Obama☭are monstrosity.

I find it hard to believe that the enactment of the employer mandate won't have a negative effect on employment.

rjk1915

Everyone conveniently forgets that even in good times the unemployment rate is about 5% or 6%. There are always the voluntarily unemployed.

Dr. Information

Bottom line is, the Feds have been stimulating the economy from going into a tailspin for 5 years now. Unplug the life support and see how it goes.

Contango

Re: "Unplug the life support and see how it goes."

Rumors of tapering in Sept. caused the Mkt. to swoon and the 10 yr. Tresy. to edge close to a 3% yield.

Ultimately, it's all positive to remove some of the malinvestments from the economy.

Unfortunately, a rise in interest rates will mean that the costs associated with operating an inflated & bloated public sector will also increase.

The latest rumor is that tapering will occur in or after March after Ms. Yellen is likely seated.

Warren Buffett called the Fed the "greatest hedge fund in history."

http://www.bloomberg.com/news/20...

QE was something that was never tried before, let's hope that the pointy headed academics can pull off a reverse action.

Hedge funds never go bust do they? :)

The Big Dog's back

Let me think, why was the economy going into a tailspin to begin with? Oh yeah, CONservative, Repub policies.

Contango

Re: "why was the economy going into a tailspin to begin with?"

Because the Democrats took control of Congress in 2007? :)

The Big Dog's back

Repubs took control of Congress in 2010. Is that why the economy is in a tailspin?

grumpy

Last time I looked... the Senate is in the dim's control, and has been since 2007. The House is 1/2 of Congress and the Senate is the other half. So that makes you wrong... again. You must be getting used to hearing that, seems to happen often.

Contango

Re: "Repubs took control of Congress in 2010."

Wrong. The Repubs took control of the House of Representatives in 2011.

"economy is in a tailspin"?

You were referring to the '07-'08 financial crisis weren't you?

Yes, the Dems controlled both houses of Congress then.

The Big Dog's back

This just in: Repubs now declare Obamacare is the cause of Climate Change and the Great Recession of 2008-09.

kURTje

Contanko/Dr.out - 2016. They have all the answers.

Contango

Re: "They have all the answers."

Only in your delusional "let govt. do it" and "we can have it all" bankrupt mentality kurtie.

I have many, many more questions than answers.

However, I prefer to think that I know what are the correct decisions for me and mine and have repeatedly agreed to allow you the same right if only you'd pay attention.

kURTje

My family has made it safe for you & yours to exist. Yet you have had my speech deleted. Always a taker, never a doer. Typical of most Americans nowadays. Tell your daughter again to work harder.

Contango

Re: "My family, (snip)"

Whaa, whaa, whaa. You owe ME. Life's unfair. I hate you! Whaa, whaa, whaa.

God! What a whiner. Really pathetic 'if' you're an adult.

The Big Dog's back

pooh, you seem to do most of the whining on here. Whining about Obama in every other sentence.

Darwin's choice

Obama giving big dog and coasterfan their latest marching orders!

http://msnvideo.msn.com/?channel...

Dr. Information

Awe, poor kurtess, crying that nobody does anything anymore, that he did it all.

kURTje

For you Winnie . . . . ./- .. / - . . . gerke

xbreawq33

@kate Google is paying 75$/hour! Just work for few hours & have more time with friends and family. On Sunday I bought themselves a Alfa Romeo from having made $5637 this month. I never thought I'd be able to do it but my best friend earns over 10k a month doing this and she convinced me to try this http://7.ly/c8Rr

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