Jobs: U.S. economy added robust 228,000 jobs in November

Paul Davidson | USA TODAY

Show Caption Hide Caption U.S. adds 228,000 jobs last month Job growth rose at a strong clip in November and wages rebounded. As Fred Katayama reports, that suggests a healthy economy that analysts say doesn't need the tax cuts President Trump proposes. Video provided by Reuters

Employers added 228,000 jobs last month in a sign the labor market is healthy despite worker shortages and two months of hurricane-related volatility.

Wage growth, however, remained tepid.

The unemployment rate, which is calculated from a different survey, was unchanged at 4.1%, the Labor Department said Friday.

Economists surveyed by Bloomberg forecast 195,000 employment gains in November.

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Businesses added 221,000 jobs, lifted by hiring in professional and business services, health care and manufacturing. Federal, state and local governments added 7,000.

Job gains for September and October were revised up by a total 3,000. September’s was upgraded to 38,000 from 18,000 and October’s was revised down to 244,000 from 261,000.

Average hourly wages rose 5 cents to $26.55, nudging annual gains to 2.5% from 2.4%. Pay increases have been stuck at about 2.5% for more than a year. Economists have expected an acceleration in light of the low unemployment rate that’s making it harder for employers to find workers.

Some economists say the government's measure of average earnings growth may be skewed downward by the retirements of higher-paid Baby Boomers and the entry into the labor force of lower paid Millennials. Some other readings of the salaries of the same workers over time show faster raises.

And while the Federal Reserve is seeking sharper wage gains to underpin its plan to gradually increase interest rates, the generally strong report supports an anticipated rate quarter point hike at Wednesday’s Fed meeting. It would be the third such an increase this year.

"The solid report gives the (Fed) the green light," Gus Faucher, chief economist of PNC Financial Services Group wrote in a note to clients.

The Fed continues to expect worker shortages to eventually drive wages higher. But, "If (modest pay increases) continue Into next year, that argument is going to wear thin," says Scott Anderson, chief economist of Bank of the West. He's predicting just two rate hikes in 2018, below Fed policymakers' median forecast of three.

Job creation, meanwhile, "is firing on all cylinders," Anderson says. Hurricanes Harvey in Texas and Irma in Florida suppressed job growth in September because many workers stayed home, leading to an outsize increase in October as most of them returned to job sites. But as many as 50,000 more employees in Texas, Florida and Georgia were not back in time to be counted in the October survey and could have further bolstered payrolls in November, Goldman Sachs economists said.

Although permanent staffing cuts by storm-damaged businesses could continue to idle some of those workers, that should be more than offset by rebuilding efforts in the hurricane zones that lifts hiring in construction, the research firm said. Construction added a sturdy 24,000 jobs last month.

Other factors also seemed poised to boost November employment. This year’s early Thanksgiving likely buoyed retail hiring, says Joe Brusuelas, chief economist of consulting firm RSM U.S. And Hurricane Maria led about 200,000 residents of Puerto Rico to resettle in Florida, at least temporarily, possibly increasing job gains in that state, Goldman Sachs said in a note to clients.

Professional and business services led November’s payroll increases with 46,000. Health care added 30,000 jobs. Manufacturing added 31,000 on the back of an improving global economy. And retailers added 18,700 despite the ongoing shift to e-commerce.

There were other positives in the report. The average work week increased to 34.5 hours from 34.4 hours and 18,300 temporary workers were added. Businesses typically add to the workload of existing staffers and bring on contingent workers adding permanent jobs.

At the same time, a broader measure of unemployment that includes discouraged Americans who have stopped looking for work and part-time employees who prefer full-time jobs rose to 8% from 7.9%.

Generally, average monthly job growth has slowed this year to about 170,000 from 187,000 in 2016 as the low unemployment rate provides employers a smaller pool of available workers. Yet that slower pace is significantly more than enough to keep driving the unemployment rate lower.

Also, the economy grew at more than a 3% annual rate in the second and third quarters, its best six-month stretch in three years, as consumer and business spending continued to strengthen and an improving global economy aided manufacturers. The pickup in economic activity is fueling employers’ need to add workers.