Biggest payroll gain in almost 3 years boosts U.S. wages, fuels stock rise, rate speculation

WASHINGTON – A broad-based November hiring surge ranging from factories to offices and retailers powered the U.S. economy to create the largest number of jobs in almost three years, triggering long-awaited wage gains.

The 321,000 advance in payrolls exceeded the most optimistic projection in a Bloomberg survey of economists and followed a 243,000 gain in October that was stronger than previously reported, figures from the Labor Department showed Friday in Washington. The jobless rate held at a six-year low of 5.8 percent. Average hourly earnings rose 0.4 percent, the most since June of last year.

Persistent job growth that’s generating income growth and stoking demand increases the likelihood of employment opportunities for even more Americans. Treasury yields rose as traders bet the improvement in the labor market will help assure Federal Reserve policy makers that the economy is strong enough to withstand an increase in borrowing costs next year.

The Standard & Poor’s 500 Index gained 0.1 percent to 2,073.52 at 10:04 a.m. in New York. The Dow Jones Industrial Average rose 24.53 points, or 0.1 percent, to 17,924.63. Trading in S&P 500 companies was in line with the 30-day average for this time of the day.

- Advertisement -

“We’re seeing another piece of evidence pointing to continued growth,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa., said in a phone interview. “Is the Fed now more likely to raise rates sooner than later? That’s probably muting what would’ve been a much stronger reaction in the equity market to pretty good numbers.”

“You’ve got this really nice dynamic going on in that there’s more jobs growth, more spending, stronger GDP growth, which in turn means more jobs being created,” said Nariman Behravesh, chief economist for IHS Inc. in Lexington, Mass., and the second-best forecaster of payroll gains over the last two years, according to data compiled by Bloomberg. “It’s just a very good cycle to be in right now for the United States.”

Industries adding

Friday’s report showed factory payrolls rose the most in a year, while professional and business services took on the largest number of workers since November 2010. Hiring at retailers also picked up.

The yield on the benchmark 10-year Treasury note rose to 2.29 percent from 2.24 percent late Thursday. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 trading partners, gained 0.6 percent to 1,119.27 at 9:21 a.m. in New York. Stock-index futures were higher.

The gain in November payrolls, the most since January 2012, exceeded the median forecast in a Bloomberg survey of economists that called for a 230,000 increase in November after a previously reported 214,000 gain in October. Estimates of 100 economists ranged from increases of 140,000 to 306,000. November marked the 10th consecutive month employment has increased by at least 200,000, the longest such stretch since the 19 months that ended in March 1995.

Latest revisions

Revisions to prior reports 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 so-called participation rate, which indicates the share of working-age people in the labor force, held at 62.8 percent in November.

Employment in business and professional services climbed 86,000 last month, while payrolls rose by 28,000 at factories. Retail employment increased by 50,200 in November, the most this year.

After a three-month search, Venus Bryan, 24, will start a seasonal job next week at J.C. Penney Co. in Roanoke, Va., where she’ll be creating displays and changing prices and signing 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. The department store position, which has full-time hours, gives her “a starting point for the job market.”

“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.”

Transportation and warehousing payrolls climbed 16,700 last month, boosted by a 4,700 gain at couriers and messenger services as companies including United Parcel Service Inc. began hiring for the holidays.

Getting prepared

Last year, “both UPS and FedEx were understaffed going into the Christmas season,” Raymond Stone, an economist at Stone & McCarthy Research Associates, wrote in a Dec. 2 note to clients. “This resulted in disruptions in delivery services including a higher incidence of late deliveries. These companies have taken steps not to let that happen again this year.”

UPS, the world’s biggest package delivery company, had planned to hire as many as 95,000 people to help deliver 585 million packages in December.

Friday’s report showed average hourly earnings of all workers rose 0.4 percent to $24.66 in November from $24.57 the prior month. They were up 2.1 percent over the past 12 months.

The average work week for all employees increased 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

Yelp Inc., a service for online restaurant and local business reviews, is among those hiring. 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.”

The Fed is monitoring labor market improvement as it considers 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.

“Today’s number brings expectations of an interest rate increase a little bit,” Chris Gaffney, senior market strategist at EverBank Wealth Management in St. Louis, said via phone. “People are trying to figure out whether the economy can stand on its own, and two months ago numbers like these may have been bad for stocks. But maybe we’re at the point where the market thinks the economy can grow without the Fed pumping money into it.”

Fed survey

A Fed survey earlier this week showed broad-based job growth across industries and regions.

“Employment gains were widespread,” the central bank said Dec. 3 in its Beige Book business survey, which is based on reports gathered on or before Nov. 24. “A number of districts also noted that contacts remained optimistic about the outlook for future economic activity.”

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.

Gas prices

“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.”

Continued job growth will probably also be welcome news for the housing industry, which has shown uneven progress this year.

“We think that we’re still in the early stages of the recovery,” Brent Anderson, vice president of investor relations at Scottsdale, Ariz.-based Meritage Homes Corp., said at a Nov. 20 conference. “The underlying drivers of demand – which are population growth, job growth, affordability, household formations – are strong arguments for that growth to continue.”

No posts to display

1 COMMENT

  1. For a more detailed analysis of this story; Refer to
    The Bureau Of Labor Statistics;
    http://www.bls.gov/lau/stalt.htm …which is updated quarterly…
    as of 10/24/2014, Rhode Island’s Employment/Unemployment Rate
    of measurement at Level U6 is: FOURTEEN POINT FOUR PER CENT (14.4%)
    and as of 12/5/2014, the National Employment/Unemployment Rate of measurement at
    at Level U6 is: ELEVEN POINT FOUR PERCENT (11.4%)
    (further details at http://www.bls.gov/news.release/empsit.t15.htm
    which is updated monthly; Note that is has ONLY gone down by
    ONE TENTH OF ONE PERCENT since last month’s report)…..jkp