At 4.6%, November Unemployment Rate Lowest Since August 2007
In the last major release of employment conditions prior to the upcoming meeting of the Federal Reserve on December 13 and 14, the Labor Department reported on Friday that nonfarm payrolls increased by 178,000 positions in November. Hiring has now averaged 180,000 new positions per month over the past eleven months. The year-to-date average was down from average monthly gains of 229,000 in 2015. Nevertheless, since 2010, nearly 15 million jobs have been created. The November gain was on par with the 180,000 consensus projection. The change in total nonfarm payroll employment for September was revised up from 191,000 to 208,000, and the change for October was revised down from 161,000 to 142,000. With these revisions, employment gains in September and October combined were 2,000 less than previously reported.
Employment in healthcare increased by 28,000 positions in November. Over the past 12 months, healthcare has added 407,000 jobs.
The unemployment rate fell 30 basis points to 4.6% from 4.9% in October. It has not been lower since August 2007 and fell partly as a result of a decline in the labor force. The unemployment rate is derived from a separate survey than the payroll employment number cited previously. There are now 7.4 million people out of work, down 387,000 from October. The number of long-term unemployed (i.e., those unemployed for more than 6 months) totaled 1.9 million and accounted for roughly 25% of those unemployed. The U-6 unemployment rate, which takes into account discouraged and underemployed workers, slipped back to 9.3% from 9.5% in October. This was the lowest level since April 2008.
In a separate report earlier in the week, the Labor Department reported that applications for unemployment benefits remained below 300,000 for the week that ended November 26. This was the 91st consecutive week of relatively low claims.
Average hourly earnings for all employees on private nonfarm payrolls fell by three cents to $25.89 in November. This was the first decline since December 2014. Over the year, average hourly earnings have risen by 2.5%, less than the 2.8% gain seen in October. Average hourly earnings increased 2.3% in 2015 and 2.1% in 2014. Increases in minimum wage rates in many states and tightening labor markets may start to put further pressure on this measure of earnings.
The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work, fell slightly to 62.7% in November, little changed from October. It is very low by historic standards and in part reflects the effects of retiring baby boomers.
The November jobs report paints a picture of a strengthening labor market and will add to the conviction of many within the Federal Open Market Committee (FOMC) that they should increase interest rates at their upcoming December 13–14 meeting. In December 2015, the Fed raised its benchmark interest rate 25 basis points, the first increase since the financial crisis. There has been much discussion of further increases since that time, but there has not been one yet.