Traders keep bets on Fed rate hike later this month

Traders keep bets on Fed rate hike later this month

Manufacturers, still beset by the oil slump and a strong dollar that has hurt exports, trimmed 4,000 jobs. Consumer spending, inflation, the housing market, and manufacturing have improved recently, too.

Economists had forecast payrolls rising by 175,000 last month and the unemployment rate remaining unchanged at 4.9 percent. Average hourly earnings fell three cents, or 0.1 percent, after shooting up 0.4 percent in October.

Wages rose 2.5 percent in November from a year ago, though that marked a slight slowdown from October.

The report on Friday made one thing clear: President-elect Donald Trump will inherit the same two-track U.S. economy that bedeviled his predecessor.

The Fed last raised rates in December 2015, which was its first rate hike in almost a decade.

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 180,000 this year.

Official figures released yesterday by the Labour Department show the jobless rate fell 0.3 point to 4.6 per cent, with a solid 178,000 new positions created.

"I think interest rates are going to stay relatively low for the next couple of years", Steven Mnuchin, Trump's pick for treasury secretary, said Wednesday. But longer-term problems persist - especially a stubbornly high number of men who are out of work and have given up looking. The number of jobless workers decreased, while the number of people with jobs increased.

Our earlier story, from Reuters, posted at 4:38 a.m.

Still, the overall economic picture could inspire the Federal Reserve to raise interest rates during its December meeting. This was unexpected, given that the tight labor market - characterized by a record number of job openings and fewer job seekers - put some upward pressure on wages in recent months.

"Our best answer here is that more people stopped looking for work", says Steve Chiavarone, portfolio manager at Federated Investors. It would be the Fed's first and only rate hike this year and its already highly expected that the Fed will raise rate in two weeks.

Beyond job growth, attention will be paid to wages, which have risen quite slowly through the economic recovery. The last time the national unemployment rate was that low was August 2007 - before the recession.

"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 NY.

"I think at 4.6 percent people have to question at what point are we going to see those wage increases", said Heidi Learner, chief economist at Savills Studley in NY.

Average hourly earnings month-on-month: +0.2%.

The largest increases were seen in the Monroe Metropolitan Area and Northeast Lower Michigan. The central banks' policy-setting committee meets on December 13-14.



Other news