Hiring Surge Gives U.S. Expansion a Lift Into 2015
So much for secular stagnation.
A November surprise that included a jump in wages as well as the biggest hiring surge in almost three years suggests the world’s largest economy is putting aside doubts about the strength of the expansion.
The 321,000 advance in payrolls followed a 243,000 increase in October that was stronger than previously reported, Labor Department figures showed today in Washington. The jobless rate held at a six-year low of 5.8 percent and earnings rose by the most since June of last year.
From factories to offices and retailers, employers took on more staff last month, giving American consumers the bump in pay needed to drive holiday spending. Treasury yields rose as traders bet the improvement in the labor market will help reassure Federal Reserve policy makers that the economy is strong enough to withstand an increase in borrowing costs next year.
The breadth of industries hiring last month was the broadest since 1998, a sign the benefits of the expansion were rippling through the economy.
Factory payrolls rose by the most in a year, professional and business services companies took on more employees than at any time since November 2010, financial firms boosted payrolls by the most since early 2012 and hiring at retailers picked up.
Venus Bryan is among Americans seeing an improvement, even as it’s been slow to develop. After a three-month search, Bryan, 24, will start a seasonal job next week at J.C. Penney Co. in Roanoke, Virginia, where she’ll be creating displays and changing signs and price tags on merchandise.
While she’d like to be able to use her sociology degree one day, Bryan said she needed to get work experience on her resume. Her new full-time job is “a starting point,” she said.
“It may not be exactly what you want at that moment, but I think the job market is getting better,” Bryan said. “It just may not be improving fast enough for some people.”
The yield on the benchmark 10-year Treasury note rose to 2.31 percent at 4 p.m. in New York from 2.24 percent late yesterday. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 trading partners, gained 0.9 percent, and the Standard & Poor’s 500 Index advanced 0.2 percent.
Today’s figures show the U.S. remains a standout as the rest of the world struggles. The Bundesbank today cut its economic forecast for Germany, Europe’s largest economy, through 2016. The central bank cut its projection for growth next year to 1 percent compared with a June outlook of 2 percent.
The November gain in U.S. payrolls, the most since January 2012, exceeded the median forecast in a Bloomberg survey of economists, which called for a 230,000 increase. The October gain was revised up from a previously reported 214,000 increase.
Estimates of the 100 economists surveyed ranged from increases of 140,000 to 306,000. November marked the 10th straight month employment has increased by at least 200,000, the longest such stretch since the 19 months that ended in March 1995.
Revisions added 44,000 jobs to payrolls in the previous two months. To calculate the data, the Labor Department surveys businesses and households for the pay period that includes the 12th of the month.
“The underlying strength is definitely there and that’s evidenced by the fact that the September and October numbers were also revised up,” said Nariman Behravesh, chief economist for IHS Inc. in Lexington, Massachusetts, and the second-best forecaster of payroll gains over the last two years, according to data compiled by Bloomberg. “We have a very strong labor market.”
The term secular stagnation, coined by economist Alvin Hansen during the Great Depression, refers to an extended period of little or no economic growth. It has recently been revived by former Treasury Secretary Lawrence Summers and others to describe the state of the economy after the last recession.
Summers said that secular stagnation “remains an important issue” for the U.S. and other industrial nations, in spite of today’s job news.
“The economy certainly does not appear to be stagnant at the moment,” Summers, who is now a professor at Harvard University in Cambridge, Massachusetts, said in a brief telephone interview. However, “whether growth can be sustained at rapid rates at normal type interest rates conducive to financial stability is certainly not yet fully established.”
The Obama administration said the improving economy underscored the importance of Congress avoiding a government shutdown by passing legislation to fund the government before it adjourns for the year.
“To create an environment in which this progress can continue, it is critical that Congress take the basic steps needed to fund the government and avoid creating disruptive and counterproductive fiscal uncertainty,” Jason Furman, chairman of the White House’s Council of Economic Advisers, said in a statement.
Today’s report showed hourly earnings of all workers rose 0.4 percent on average to $24.66 in November from $24.57 the prior month. They were up 2.1 percent over the past 12 months. .
The unchanged jobless rate belies improvement in other measures of slack, including the number of workers involuntarily stuck in part-time jobs and the long-term unemployed.
The fewest Americans since October 2008 are working part-time for economic reasons, while more reported taking up those gigs voluntarily, the report showed. The share of jobless who’ve been unemployed for 27 weeks or more dropped to 30.7 percent for its best reading since June 2009.
The underemployment rate -- which includes part-time workers who’d prefer a full-time position and people who want to work but have given up looking -- declined to 11.4 percent last month, its lowest level since September 2008.
The work week also increased by six minutes to 34.6 hours, the highest since May 2008. A longer workweek often amounts to greater take-home pay for many workers.
Yelp Inc. (YELP), a service for online restaurant and local business reviews, is among those adding staff. The San Francisco-based company said it hired about 200 salespeople in the third quarter in addition to the 100 it brought on in the prior period. At the end of last year, Yelp had 1,984 employees.
“What we’re really doing is preparing ourselves for the future by hiring so many folks now and making sure that they are productive,” Chief Financial Officer Robert Krolik said at a Nov. 21 industry conference. “And if for some reason economically things turn around or do something different, all you have to do is slow down the hiring process.”
Fed policy makers are monitoring labor market improvement as they consider when to raise borrowing costs for the first time since 2006. The next meeting of the Fed’s Open Market Committee is Dec. 16-17, and a majority of policy makers forecast they will start raising interest rates at some point next year.
The steady progress in the job market, along with falling gasoline prices, has brightened consumers’ spirits. With fuel prices at a four-year low and still dropping, Americans are flocking to auto dealerships.
Motor vehicle sales rose to a 17.1 million annualized rate in November, the second-highest level since January 2006, according to data from Ward’s Automotive Group. Today’s jobs report showed auto dealers boosted payrolls by 3,000 workers last month.
“By any measure, households are reaping significant disposable income gains each week at current gas prices,” Emily Kolinski Morris, chief economist at Ford Motor Co., said on a Dec. 2 conference call. “Importantly, younger and lower-income households are now seeing improved personal financial condition in part due to lower energy prices.”