The jobless rate falls, for all the wrong reasons

A man walks past the Federal Reserve Bank in Washington D.C

But only about a third of that drop occurred because people found work.

The number of unemployed people declined by 387,000 to 7.4 million.

The economy "is fundamentally underperforming, and needs structural fixes to improve its long-term growth rate", said Douglas Holtz-Eakin of the conservative American Action Forum and former director of the Congressional Budget Office. Real gross domestic product increased 3.2% in the July-September quarter, the most in two years.

"The Fed is expected to inch rates higher again as early as its next meeting, later this month", he reports. Wages are expected to rebound in December. And businesses may offer more hours to their part-time workers.

Average hourly earnings dipped by three cents from last month to $25.89, but they're up by 2.5 percent overall over the past year.

"This is likely to be a temporary setback, as further tightening in labor market conditions should increase competition for skilled labor and support stronger wage growth", said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

Solid job growth helped push the unemployment rate down to 4.6 percent. Trump, who campaigned on a vow to turn around the US manufacturing sector, is likely to blame the central bank if the dollar appreciates too far.

"Based on everything we can possibly know right now, there's no chance that the Fed won't raise rates" at the December meeting, Hamrick told International Business Times in a phone interview, barring "any Brexit- or Donald Trump-type event" that could potentially send market expectations off the rails.

Recent data showed that the USA economy grew at an annual pace of 3.2 per cent in the third quarter of the year.

Job gains have slowed from an average of 229,000 per month in 2015 to an average of 180,000 this year as the labor market nears full employment. Possible new trade or immigration restrictions could make markets even tighter, and switch the Fed from worrying about the risk of deflation to fighting price rises before they get out of hand."There is much more than the Trump election driving the. rally that started the day after the election", Bank of the West chief economist Scott Anderson wrote.

"It is not that firms aren't trying to hire, they just can not find qualified workers at the wages they want to pay", said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. Wages have risen only about 2.5 percent over the past year, about a percentage point less than is typical in a healthy economy.

The unemployment rate, which is calculated from a different survey than the payroll total, fell from 4.9% to 4.6%, lowest since August 2007, the Labor Department said Friday.That's because 226,000 Americans left the labor force, which includes those working and looking for jobs.

The participation rate is near multi-decade lows, partly reflecting demographic change. Manufacturing payrolls have now dropped for four straight months. Construction employment increased by 19,000 jobs last month after rising by 14,000 in October.

Friday's report from the Labor Department reflected a resilient job market that is helping drive the USA economy.

But Nicholas Eberstadt, an economist at the right-leaning American Enterprise Institute, notes that most European countries also lost manufacturing jobs, yet haven't seen a similar decline in male employment.

Nonfarm payrolls increased by 178,000 jobs last month, the Labor Department said on Friday.



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