US upbeat as jobless rate hits five-year low
Washington, December 7, 2013
US employers hired more workers than expected in November and the jobless rate fell to a five-year low of seven per cent, raising chances the Federal Reserve will start pulling back its bond-buying stimulus sooner rather than later.
Non-farm payrolls increased by 203,000 new jobs last month, the Labour Department said yesterday.
Global stocks rallied at the news.
The unemployment rate dropped three-tenths of a per centage point to its lowest level since November 2008 as some federal employees who were counted as jobless in October returned to work after a 16-day partial shutdown of the government.
Economists polled by Reuters had forecast payrolls rising only 180,000 last month and the unemployment rate falling to 7.2 per cent from 7.3 per cent.
Job gains for September and October were revised to show 8,000 more jobs created than previously reported, lending more strength to the report.
Other details were also upbeat, with employment gains across the board, average hourly earnings rising and the workweek lengthening.
In addition, the jobless rate fell even as the participation rate - the share of working-age Americans who either have a job or are looking for one - bounced back from a 35-1/2-year low touched in October.
"The US labour market is still far from healed, but it certainly is moving in the right direction," said Eric Stein, co-director of the Global Income Group at Eaton Vance Investment Managers in Boston.
Despite the jobs data, many economists said the central bank was still likely to hold off reducing its purchases until January or March to ensure the economy was on solid ground.
"This number puts a December taper on the table, but it isn't a certainty," said Stein.
Improving labour market prospects buoyed consumer confidence in early December.
The Thomson Reuters/University of Michigan's preliminary consumer sentiment index jumped to 82.5 from 75.1 in November, a separate report showed.
Economic data so far for the fourth quarter have been mixed, with labour market and consumer spending indicators firming.
However, the housing market and business spending have slowed.
Economists believe the Fed will probably not want to pull back on its stimulus before legislators on Capitol Hill strike a deal to fund the government.
That could come as soon as next week.
Congressional aides have said negotiators were down to the final details as they tried to close in on a deal.
A separate report from the Commerce Department showed consumer prices were steady in October, after having risen by 0.1 per cent for three straight months.
Over the past 12 months, prices rose 0.7 per cent, the smallest gain since October 2009.
Excluding food and energy, prices were up just 0.1 per cent for a fourth straight month.
These so-called core prices were up only 1.1 per cent from a year ago.
Both inflation measures remained well below the Fed's 2 per cent target, and some economists said they provided another reason for the central bank to move cautiously in pulling back its stimulus.-Reuters