The new numbers released by the Department of Labor show a resilient U.S. economy that has been driven by consumer spending and job creation, even amid the turbulence of weak commodity prices and a strong dollar.
The latest jobs data — the last significant economic measuring stick before the Fed’s Dec. 15-16 policy meeting — easily meets the targets laid out by the central bank as prerequisites for a rate hike, economists said. Earlier this week Fed Chair Janet Yellen said she still wanted to see more data before making a decision about a potential rate hike at the central bank’s next meeting. But she seemed to lay the groundwork for liftoff, saying the economy had “recovered substantially,” while noting “continued improvement in the labor market.”
Economists on Friday said a rate hike was all but assured, barring an unexpected crisis.
“Buckle your seatbelt,” said Andrew Chamberlain, the chief economist at Glassdoor.com, an online job marketplace.
The November jobs report “provided the confirmation that I think the Federal Reserve was looking for to illuminate the final green light,” Carl Tannenbaum, chief economist for Northern Trust, said in an interview.
The latest jobs data was squarely in line with market expectations but still helped drive up shares on Wall Street, where investors for weeks have been gearing up for Fed action. The Dow Jones average and Standard & Poor's 500 index both shot up more than 2 percent Friday.
If the Fed calls for liftoff, it would end an unprecedented period of easy borrowing that has helped drive investment and spending. The Fed feels that rock-bottom interest rates — if allowed to linger too long — could lead to risky behavior from investors and cause price bubbles. But a rate hike, even a gradual one, carries the risk of a pullback in business investment and hiring.
The nation has now added 2.3 million jobs this year, an average of 209,000 per month. That pace is stronger than any year over the past decade other than 2014. Revisions to jobs figures for two earlier months also provided a slight boost; the government now says 298,000 jobs, rather than the initially forecast 271,000, were created in October.
Job growth in November was driven by strong gains in the construction industry, which expanded at its greatest pace in nearly two years. That was enough to offset another contraction in the mining sector — which in November shed 11,000 jobs, hemorrhaging caused by sustained low oil prices.
Most economists say that the labor market has been the strongest element of the U.S. economy, even though wages have been slow to rise. After spiking in October, the average hourly pay for U.S. workers rose only modestly in November, growing by four cents, to $25.25. Most economists want to see wages rise consistently over a long period — a sign that the reservoir of job seekers has shrunk to the point where employers give raises to compete for hires.
That virtuous condition, known as full employment, is one of the final key pieces of a full economic recovery. More widespread wage gains would also help lift consumer prices, pushing inflation back toward 2 percent — a long elusive target that the Fed considers to be healthy. The Fed is charged by Congress to keep prices stable and maximize employment.
There are signs that the labor market is beginning to tighten. For the year, wages are up 2.3 percent — an unspectacular figure but one that is also above the 2 percent average seen throughout this recovery. Economists say some companies are having a harder time filling positions, and government data shows that job openings are taking longer to fill. Checkers and Rally’s Restaurants, for instance, has seen a 12 percent drop in applicants over the last year, despite a heavier emphasis on recruitment.
“When the pool shrinks, it makes it harder,” said Jennifer Durham, the fast food company’s senior vice president and chief development officer. “I think minimum wages are increasing, and we’re going to have to adapt to accommodate that.”
Many potential workers, though, still languish on the sidelines. The number of long-term unemployed still stands well above the number from before the Great Recession, as does the number of people reluctantly working part-time. The labor force participation rate — the percentage of Americans holding down or seeking a job — is at a historically low level and has fallen steadily for years.
“We’ve seen a nudging-up of wages, but it’s certainly not accelerating at a rapid enough pace where we would say there is widespread labor shortage,” Heidi Shierholz, the Department of Labor’s chief economist, said in an interview. “We still have slack in the labor market.”
Ylan Q. Mui contributed to this report.