Bloomberg
In the wake of November’s surge in employment and stronger wages, even the skeptics about the US economic recovery are turning into optimists.
The 321,000 advance in payrolls followed a 243,000 increase in October that was stronger than previously reported, Labour Department figures showed Friday in Washington. It marked the 10th straight month employment has increased by at least 200,000, the longest stretch since the 19 months that ended in March 1995. The jobless rate held at a six-year low of 5.8% and earnings rose by the most since June of last year.
“It’s a great report,” said Diane Swonk, chief economist at Mesirow Financial Holdings in Chicago. “Both the quality of jobs improved along with the quantity.”
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. Economists including former US Treasury official Brad DeLong, Nobel Prize winner Paul Krugman and Stephen Stanley of Amherst Pierpont Securities say the hiring surge shows the outlook has finally improved.
It was “the first good monthly report of the recovery,” DeLong wrote yesterday on his blog and in a Twitter post. That’s because it’s the first since before the recession in which payroll growth exceeded 300,000 with unemployment below 6%, he said.
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 JC 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 put her sociology degree to use 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.”
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 yield on the benchmark 10-year Treasury note climbed to 2.31% in New York late yesterday from 2.24% the prior day.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 trading partners, gained 0.9%, and the Standard & Poor’s 500 Index advanced 0.2% to close at a record 2,075.37.
The November gain in US payrolls was the biggest since January 2012, and exceeded the median forecast in a Bloomberg survey of 100 economists, which called for a 230,000 increase. Estimates ranged from increases of 140,000 to 306,000.
Revisions added 44,000 jobs to payrolls in the previous two months. To calculate the data, the Labour Department surveys businesses and households for either the pay period or week 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 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 stuck with his warning that the economy could be mired in an era of low growth.
DeLong, of the University of California, Berkeley, and Summers have called for more government spending to bolster the recovery.