WASHINGTON—The U.S. added 178,000 nonfarm jobs during November and the unemployment rate declined to a nine-year low of 4.9%, according to data released by the Labor Department last week.
Analysts are predicting those numbers will move the Fed to increase rates when it meets in two weeks.
The cloud in the silver lining, however, remains average hourly earnings for production and nonsupervisory employees, who make up approximately 80% of the U.S. workforce. While low unemployment would seem to drive wages up, wage increases have been small. The Labor Department figures show the average hourly wage rose to $21.73 from $21.23. Average weekly earnings were $730.13 in November, up from $715.45 one year earlier, which is just barely ahead of the inflation rate of 1.5%.
Analysts have also noted the broader measure of the unemployment rate, which takes into account those part-time workers who would prefer full-time jobs and marginally attached workers, is approximately 9.3%, although it has declined in recent months.
The Wall Street Journal quoted two analysts who have a different view of what the latest numbers mean:
Paul Ashworth of Capital Economics told the Journal: "A December rate hike is coming and, assuming that we see a major fiscal stimulus passed in the first half of next year, we expect an additional 100 basis points of tightening from the Fed next year, taking the fed funds target range to between 1.50% and 1.75% by end-2017."
Shaun Osborne, chief foreign-exchange strategist at Scotiabank, told The Wall Street Journal the report confirms the Federal Reserve’s case for raising U.S. interest rates this month, but raises some doubts that the Fed will be able to tighten policy aggressively in 2017.
“The Fed is locked in at this point for a December increase,” Osborne was quoted by the Journal as saying. “But the argument for more rate increases next year would have been sounder if we’d seen a pickup in hourly earnings.”