Washington - US employers likely boosted
hiring in November amid growing confidence in the economy,
making it almost certain that the Federal Reserve will raise
interest rates later this month.
Nonfarm payrolls probably increased by 175 000 jobs last
month after rising by 161 000 in October, according to a Reuters
survey of economists. The Labor Department will release its
closely watched employment report on Friday at 8:30 a.m. (1230
GMT).
Other recent data has shown the economy growing at a brisk
clip in the third quarter, and shown gains in consumer spending,
inflation, housing and manufacturing early in the fourth
quarter.
"The economy is in good shape. The Fed has the green light
to raise interest rates this month, and most likely they are
going to raise a couple of times next year," said Jack McIntyre,
portfolio manager at Brandywine Global in Philadelphia.
Economists said jobs growth could surprise on the upside,
given that Hurricane Matthew, which lashed the U.S. East Coast
in October, likely depressed the payrolls count in that month by
as much as 40 000.
In addition, first-time applications for unemployment
benefits dropped to 43-year lows in November and other labor
market surveys were generally strong last month.
"That drag (from the hurricane) should reverse and boost
November payrolls by a decent amount, supported by a shift to
unusually mild weather across the country in the first half of
November," said Ted Wieseman, an economist at Morgan Stanley in
New York.
Wage growth slows
The unemployment rate is expected to have held steady at 4.9
percent last month.
An anticipated pullback in wage growth after two straight
months of solid increases could put a wrinkle in an otherwise
upbeat employment report. Average hourly earnings are forecast
increasing by 0.2 percent after shooting up 0.4 percent in
October.
The slowdown would lower the year-on-year gain in wages from
October's 2.8 percent increase, which was the largest rise in
nearly 7-1/2 years. The expected moderation largely reflects a
calendar quirk, which economists expect Fed officials will
overlook at their December 13-14 policy meeting.
"We would chalk up most of this weakness to calendar effects
and look through to the acceleration that has become more
evident over recent months," said Andrew Hollenhorst, an
economist at Citigroup in New York.
While a surge in US government bond yields and a rally in
the dollar in the wake of Donald Trump's election as the next
president had tightened financial market conditions, economists
said it was probably insufficient for the Fed to stand pat. The
US central bank raised its benchmark overnight interest rate
last December for the first time in nearly a decade.
Read also: Fed holds rates steady
As the labor market nears full employment, job gains have
slowed from an average of 229 000 per month in 2015 to an
average of 181 000 this year.
Still, the monthly increases are more than enough to absorb
new entrants into the labor market. Fed Chair Janet Yellen has
said the economy needs to create just under 100,000 jobs a month
to keep up with growth in the working-age population.
Trump's plan to increase infrastructure spending and slash
taxes could encourage companies to boost hiring and spur an even
faster pace of economic growth over the coming years.
"Trump is inheriting a strong economy, an economy that is
near full employment and clicking on almost every cylinder. It
has plenty of momentum heading into 2017," said Ryan Sweet, a
senior economist at Moody's Analytics in West Chester,
Pennsylvania.
Manufacturing payrolls likely fell for a fourth straight
month in November, while construction employment probably
notched further gains. A rebound in retail sector employment is
expected after October's surprise decline.