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

coasterfan

Yep. Same continued good news, month after month after month. 200,000 new jobs last month, and the lowest unemployment level in five years. Just imagine how much better things would be, if the House wouldn't have fought against Obama/job growth every step of the way. Of course, when ideology and getting re-elected Is more important to those folks than actually helping those less fortunate - the unemployed - I suppose we shouldn't be surprised. Meanwhile, those same folks are hard at work, auditioning for the role of Scrooge, as they push for $40 billion in cuts to food stamp so just prior to Xmas.

Contango

Re: "Just imagine how much better things would be, if the House wouldn't have fought against Obama/job growth every step of the way."

Just imagine how much future tax liabilities would increase with another $1 trillion in stimulus spending?

With the Fed Resv. eventually tapering, who's gonna buy the increased Treasury debt?

coasterfan

Stimulus money will be tapering off in January, I read this morning, as the Fed has determined that things are improving enough that less stimulus is needed. You, of course, wouldn't have heard that news, since there likely is poor internet/TV reception and no newspaper delivery under that pile of sand where your head is buried. :)

Contango

Re: "Stimulus money will be tapering off in January, I read this morning,"

Only a rumor.

IMO, NOTHING is gonna happen until Ms. Yellen is confirmed and seated as Fed Chair.

Of course then again, you like grasping at straws and running with half information.

When tapering does occur, because the Fed views an improved economy, then there will be no need for a federal jobs program will there?

Shoots the h*ll out of yours & Pres. Obama's whining about a job program and confirms my observations that ALL the heavy lifting has been monetary.

Stop listening to Bill Maher. He's a half-*ssed comedian, not a business and economics expert.

JudgeMeNot

No talk of the labor force participation rate? Liberals don't wanna talk about the labor force participation rate in September 2013 was 63.2%, the lowest since 1978.

The Big Dog's back

right wingnuts, always trying to move the goalposts.

anthras

I agree really good job growth and only 41% of the jobs created in November were government jobs. Nothing as good as a bigger government.

Nor'easter

How many full-time jobs that can support a family were created? Most of this so-called job growth is temporary Christmas help and is 20-28 hours a week to eliminate requirement for Health insurance and less than 13 weeks to eliminate qualifying for unemployment when they end in January.

coasterfan

Some are temporary, but the increase has been a continual thing for many, many months. I suppose that you think jobs created in July/August are for the Xmas season?

I guess we all have a choice whether to be either cynical or encouraged.

JudgeMeNot

Liberals don't wanna talk about the labor force participation rate in September 2013 was 63.2%, the lowest since 1978.

coasterfan

Oh, and while I'm at it, let's head off the usual conservative naysayers. NO ONE wants to go back to the double digit unemployment Bush gave us as a lovely parting gift when he left office in 2008. Everyone does understand that 7% is a lower number than 11%, right?

Darwin's choice

And while you're at it, how about posting the real numbers,you know, the numbers that are what the actual percentage of unemployed in the country!

The official U6 unemployment is 13.2%

Suckling.

coasterfan

Meh. You can gripe all you want, but I think we both know that things would be much much much worse, if McCain or Romney had won. Maybe you should look at the Unemployment chart (2003-2013) that Contango provided.

Contango

Re: "we both know that things would be much much much worse, if McCain or Romney had won"

Total conjecture on your part.

IMO, since the Fed is the REAL mover and shaker in this economy, it probably would have looked not too dissimilar.

Contango

Re: "double digit unemployment Bush gave us as a lovely parting gift," "11%"

Better check the stats.

Unemployment rate, Dec. '08: 7.3%

http://data.bls.gov/timeseries/L...

Looks like Pres. Obama's just treadin' water.

As a self-proclaimed former teacher, did you just make crap up and expect your students to fall for it as well?

Fromthe419

;), His unbridled loved for Dear Leader cracks me up, when are people going to wake up to the fact that both parties have an equal hand it what ails our nation? They both answer to the same masters and nothing will change until our monetary policy changes. We are on a path to systemic collapse unless we drastically change how money is created and reduce our trade imbalance. Unless we address these 2 issues, we will continue to see an erosion in the quality of life for most of us.

Contango

Re: "money is created,"

It ain't so much how it's "created," it's the value.

Since the Fed Resv. was created in 1913, the USD has lost approx. 96% of it's value.

People tend to look at the nominal numbers and not the inflated ones.

Nominal numbers tend to create a false sense of wealth.

We all certainly found out how phony those inflated numbers were during the housing crash didn't we?

It took me approx. 3 yrs. in order to sell my house in Chicago. From the time we put it on the mkt. in '07, until we sold it in '09, the price we valued it at declined by 28%.

According to Zillow, it's declined an additional 38% since.

Fromthe419

I think that how money is created is the problem. Money equals debt and debt equals money. Until we put the creation of money back into the control of congress and do away with the Federal Reserve, we are screwed and are slaves to central bankers. Back our currency with something, (gold, silver, lumber...something of value). Fiat currency is destroying the standard of living for every person on this planet, it can be inflated or deflated depending on where the business cycle is. It continues to created booms and busts and every time, the people lose.

Contango

Re: "creation of money back into the control of congress,"

With all due respect, the Fed. Resv. is ALREADY a wholly owned subsidiary of the govt.

We need a market based currency whose value can't be manipulated by any of those boobs in DC. be it gold, silver or 'whatever.'

I enjoyed the exchange between Rep. Paul and Fed Chair Bernanke:

http://www.youtube.com/watch?v=2...

Stop It

+1

I really liked Paul. He always said things that EVERYONE could understand. Even some of the space cadets in here.

The Big Dog's back

No both parties don't have an equal hand in it. One party only cares about the 1%. The other party cares about the 99%.

Pete

No both parties aren't equal. Only one directly caused the largest municipal bankruptcy in American history and is bound and determined to do that for our entire nation

deertracker

You realize that was W, right?

JudgeMeNot

If Barry Obama had a city, it would look like Detroit.

coasterfan

Neither party has all the answers, but the past 6 years have shown us that things have gotten better under a 2-term Democrat in the office, and stunningly worse under a 2-term Republican president. I'll take the lesser of 2 evils, any day, especially since the choices your party offers are so stunningly BAD.

Darwin's choice

Absolute Bullchit!!!!!!

Detroit democrat better?

coasterfan

I wish I'd jotted down the source where I read the 11%; it was awhile ago, so I'll defer to the link you provided. My question to you: Over the past year, you've made it abundantly clear that you distrust all gov't provided information, when it comes to the economy/unemployment. So why would you use a gov't provided graph to make a point? Apparently, their info is only good when it doesn't contradict your viewpoint?

Interesting graph, isn't it? Two things are immediately evident. #1 Between Jan. 2008 and Jan. 2009, the graph looks like a hockey stick: huge jump from 5% to 8% unemployment. #2: Unemployment continued to rise, reaching a 10% unemployment level midway through Obama's first year in office. Not coincidentally, they began to immediately drop after Obama's economic plan began to be implemented.

Seriously dude, look at the chart. From Jan. 2007 on, it got worse and worse under Bush, almost instantly better and continually better under Obama. It becomes even more embarrassing for Bush, when you realize that he inherited a surplus budget and turned it bad, while Obama inherited a deficit budget and gradually turned it better.

Contango

Re: "I wish I'd jotted down the source where I read the 11%; it was awhile ago,"

Don't have much of a mind for numbers do you?

You mostly spew out rehashed progressive rhetorical nonsense.

Who give a sh*t where you read that nonsense? I'll stick with the Fed's numbers.

---------------------

Re: "he inherited a surplus budget and turned it bad,"

Again:

The run up to Y2K caused increased business cap-ex spending and subsequently greater tax revenue creating a "temporary" budget surplus.

The Mkt. hit it's high in Mar. 2000 and began declining.

Pres. Bush "inherited" a mild recession.

Remember your pal, Mr. Krugman writing for a housing bubble in order to replace the bursted Tech bubble?

Contango

Re: "they began to immediately drop after Obama's economic plan began to be implemented."

Asked repeatedly:

What WAS/IS "Obama's economic plan" that is producing this employment?

anthras

Two people in the Obama administration did promise that if Obama would get the 800billion dollar stimulus package that the unemployment would not go above 8% they got it and it did go well above 8%

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