US unemployment ticks down; job market robust
WASHINGTON: The United States saw its jobless rate dip in November while hiring rose more than expected, government data showed Friday, fueling optimism that the world’s biggest economy may achieve the elusive goal of avoiding recession, while also taming inflation.
ARLINGTON: A man walks past a "now hiring" sign posted outside of a restaurant in Arlington, Virginia, on June 3, 2022. -- AFP.
The economy added 199,000 jobs, said the Department of Labor, and unemployment fell to 3.7 percent. Wage growth accelerated to 0.4 percent from the prior month but held steady from year-ago levels. Although employment appears to be heating up, analysts noted the underlying state of the labor market has been weakening. The figures could also be revised downwards.
The latest hiring uptick comes on the back of October figures that were temporarily bogged down due to strikes by auto workers and in Hollywood. “Employment growth is below the average monthly gain of 240,000 over the prior 12 months but is in line with job growth in recent months,” said the Labor Department. The figures are closely watched by markets and the Federal Reserve as policymakers ponder how to handle interest rates in order to fight stubborn inflation. The central bank is due to announce its next rate decision at the end of a policy meeting next week. President Joe Biden, who is running for reelection next year, lauded the low unemployment and overall drop in inflation. “But I know prices are still too high for too many Americans. So my top economic priority is to lower costs for hardworking Americans,” he added in a statement.
“Payroll gains were inflated by returning strikers in November, but the underlying pace of job growth has slowed in recent months,” said Nancy Vanden Houten, lead US economist at Oxford Economics. By some estimates, headline growth was boosted by about 30,000 on the return of auto workers.
Resilience in income gains is also expected to support consumption during the holiday season. Rubeela Farooqi, chief US economist at High Frequency Economics, said she continues to expect a cooling in the labor market as the effect of higher interest rates flows through the economy. She added that the latest data is unlikely to change the Fed’s outlook and she expects the central bank to cut the benchmark lending rate, probably by mid-2024.
“Overall, the labor market remains strong, with job growth still robust and the unemployment rate at extraordinarily low levels,” said Farooqi. All key metrics in the November employment report exceeded expectations, said Nationwide chief economist Kathy Bostjancic. While markets have rallied strongly in the past month on rising expectations that the Fed would start to cut rates in the first quarter, she added: “This delivers a reality check to financial markets.” —AFP
But there appears to be optimism that the United States can cool the economy—and lower inflation—without tipping it into a recession. Treasury Secretary Janet Yellen told reporters on the sidelines of a trip to Mexico this week: “I’m feeling very good about the economic outlook, and most economists are envisioning continued strength in the labor market.”
On the balance between lowering inflation and growth, she added: “Economists who’ve said it’s going to require very high unemployment to get this done are eating their words.” –AFP.