Unemployment rate tumbles to a 9-year low

source
Reuters/Eduardo Munoz

The US unemployment rate fell to a nine-year low in November as fewer people searched for jobs, according to a report Friday from the Bureau of Labor Statistics.

The unemployment rate dropped to 4.6%, while labor-force participation as a share of the working-age population declined to 62.7%, remaining near the lowest level since the 1970s. Fewer people are active in the labor force partly because baby boomers are retiring in droves.

Nonfarm payrolls grew by 178,000, 2,000 fewer than economists had expected.

There was some improvement in a broader measure of unemployment – the U6 rate – which reflects people who work part time because they can’t find full-time jobs. It fell to 9.3% from 9.5%, the lowest level since April 2008. But it remains higher than the official unemployment rate, showing that many people are willing to work more hours but can’t find the jobs they really want.

The big disappointment in the jobs report was wage growth. Average hourly earnings fell 0.1% from October. 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.

Earnings rose 2.5% year-on-year. Economists had expected an annualized jump by 2.8%, matching the highest level since the recession.

The consensus expected another month of decent job gains that would not set off any alarm bells about the economy’s health, keeping the Federal Reserve on track to raise interest rates at its meeting later this month.

“This was the last hurdle on the path to a December hike, and it has been cleared convincingly,” Luke Bartholomew, an investment manager at Aberdeen Asset Management, said in a note.

“It is now incredibly hard to imagine what would stop the Fed from going. The debate now is all about what rates will do next year and beyond.”

Here’s what Wall Street was expecting:

    Nonfarm payrolls: +180,000 Unemployment rate: 4.9% Average hourly earnings month-on-month: +0.2% Average hourly earnings year-on-year: +2.8% Average weekly hours worked: 34.4