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Solid job growth cuts unemployment to 7 percent

By Christopher S. Rugaber
Associated Press

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WASHINGTON: The job market is proving surprisingly resilient.

Solid job growth in November cut the U.S. unemployment rate to 7 percent, a five-year low. The robust gain suggested that the economy may have begun to accelerate. As more employers step up hiring, more people have money to spend to drive the economy.

Employers added 203,000 jobs last month after adding 200,000 in October, the Labor Department said Friday. November’s job gain helped lower the unemployment rate from 7.3 percent in October. The economy has added a four-month average of 204,000 jobs from August through November, up sharply from 159,000 a month from April through July.

“It’s hinting very, very strongly that the economy is starting to ramp up, that growth is getting better, that businesses are hiring,” said Joel Naroff, president of Naroff Economic Advisors.

The job growth has also fueled speculation that the Federal Reserve will scale back its economic stimulus when it meets later this month.

It “gives the Fed all the evidence it needs to begin tapering its asset purchases at the next ... meeting,” said Paul Ashworth, an economist at Capital Economics.

The unemployment rate has fallen nearly a full percentage point since the Fed began buying bonds in September 2012 and has reached 7 percent earlier than most analysts had expected.

In June, Chairman Ben Bernanke had suggested that the Fed would end its $85 billion in monthly bond purchases after the unemployment rate reached 7 percent. The Fed’s bond purchases have been intended to keep borrowing rates low.

Bernanke later backed away from the 7 percent target. He cautioned that the Fed would weigh numerous economic factors in any decision it makes about its bond purchases. Many economists still think the Fed won’t begin to cut back until January or later.

While the Fed weighs its options, U.S. employers may finally be gaining enough confidence in the economy, 4½ years after the recession officially ended, to ramp up hiring. In addition to the solid job gain and the drop in unemployment, Friday’s report offered other encouraging signs:

• Higher-paying industries are adding more jobs. Manufacturers added 27,000 jobs, the most since March 2012. Construction companies added 17,000. The two industries have created a combined 113,000 jobs over the past four months.

• Hourly wages are up. The average rose 4 cents in November to $24.15. It’s risen just 2 percent in the past year. But that’s ahead of inflation: Consumer prices are up only 0.9 percent in that time.

• Employers are giving their workers more hours: The average workweek rose to 34.5 hours from 34.4. A rule of thumb among economists is that a one-tenth hourly increase in the workweek is equivalent to adding 300,000 jobs.

• Hiring was broad-based. In addition to higher-paying industries, retailers added 22,300 jobs while restaurants, bars and hotels added 20,800. Education and health care added 40,000. And after years of cutbacks, state and local governments are hiring again. In November, governments at all levels combined added 7,000 jobs.

Still, the report contained some sour notes: Many Americans are still avoiding the job market, neither working nor looking for work. That’s one reason the unemployment rate has fallen in recent months. The percentage of adults working or searching for jobs remains near a 35-year low.

And America’s long-term unemployed are still struggling. More than 4 million people have been out of work six months or longer. That figure was unchanged in November. By contrast, the number of people who have been unemployed for less than six months fell last month. Friday’s jobs report follows other positive news. The economy expanded at an annual rate of 3.6 percent in the July-September quarter, the fastest growth since early 2012.


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