US unemployment at a record low in last 9 years

The unemployment rate in the US fell, and reached a record low in November this year. This gave hopes to the thought of increasing interest rates.

Statistics from the Labor Department showed the US economy created 178,000 jobs in November. While the jobless rate fell to 4.6% from 4.9% in October.

The data adds to recent evidence of strong growth in the economy, although wage growth was weaker than expected.

Most analysts think the Federal Reserve will raise rates at its next meeting.

“This was the last stumbling block on the path to a December hike, and it has been cleared convincingly,”. Said Luke Bartholomew, investment manager at Aberdeen Asset Management.

“It is now incredibly hard to imagine what would stop the Fed from going for a rate rise.”

Weaker earnings

The Federal Reserve will hold its next meeting on 13-14 December.

Last month, the chair of the Fed, Janet Yellen,said that the US central bank could raise interest rates “relatively soon”, adding that the US economy was “making very solid progress”.

Recent figures show that the US economy grew at an annual pace of 3.2% in the third quarter of the year.

The US economy has been creating jobs at an average of 180,000 jobs a month this year, although that is less than  the average of 229,000 recorded in 2015.

Despite November’s strong jobs figures, earnings grew by less than expected. Average hourly earnings fell 0.1% from the month before. That reduced the annual increase in wages to 2.5% from 2.8% in October.

The job creation figures for September and October were also revised. Latest estimates indicating that 2,000 fewer jobs were added in the two months than previously thought.

Analysis: Andrew Walker, BBC World Service economics correspondent

Before these figures the markets were pretty clear about what they think the Federal Reserve will do when it meets later this month; it will raise interest rates. The jobs numbers have further reinforced that expectation.

It was a pretty robust figure for job creation, well ahead of economists’ estimates of what is needed to keep up with a growing population.

Also striking was a decline of 220,000 in the number who are working part-time for economic reasons. This is another measure of what economists call “slack in the labour market” that the Fed has been watching. Because it thinks the unemployment rate doesn’t tell the whole story about job problems. A decline in the number of part-timers suggests some more of the “slack” being taken up.

The marked decline in the unemployment rate is a little misleading. It partly reflects people who are no longer looking for work – they are counted as “not in the labour force” rather than unemployed. That said, this is a rather strong report.


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