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  Nonfarm Payrolls Rose 228,000 in November
Posted Under: Data Watch • Employment
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Implications:  The labor market picture keeps getting brighter for American workers.  Nonfarm payrolls increased 228,000 in November, beating consensus expectations.  In the past year, payrolls are up an average of 173,000 per month.  Although civilian employment, an alternative measure of jobs that includes small business start-ups, increased only 57,000 in November, that gauge is up 196,000 per month in the past year, so some convergence in the two measures of jobs should be expected.  The unemployment rate stayed at 4.1%, as expected, but we anticipate continued declines in 2018-19.  The lowest unemployment rate since the late 1960s was 3.8% in 2000 at the peak of that era's tech boom.  We expect to beat that by the end of 2018.  The lowest jobless rate in the 1960s was 3.4%; assuming we stay on track for a major cut in the corporate tax rate, we think that record will fall in 2019, eventually hitting the lowest levels since the early 1950s.  Although a relatively low participation rate makes it easier to have a lower unemployment rate, the participation rate is slightly higher than a year ago and the size of the labor force is up 1.6 million in the past year after a gain of 1.8 million in the year ending November 2016.  In other words, the jobless rate has been falling even though the labor force has been expanding.  Other good news in today's report includes a drop in the median duration of unemployment to 9.6 weeks, tying the low so far in this expansion.  As usual, we like to follow total earnings, which combines the total number of hours worked and average hourly earnings.  Total earnings are up a sturdy 4.8% from a year ago, signaling plenty of growth in consumer purchasing power.  This is not about the "rich getting richer;" a separate report on the earnings of full-time workers shows wages are rising faster in the lower income ranges than in the higher ones.  Put it all together, and we have a recipe that makes a rate hike at next Wednesday's Fed meeting almost certain.  The Fed will also likely say it foresees three rate hikes in 2018.  We think that's about right, but we also think the odds of four rate hikes next year are higher than the odds of only two rate hikes.  

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Posted on Friday, December 8, 2017 @ 10:31 AM • Post Link Print this post Printer Friendly

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