Unemployment Rate Hits 5-Year Low; Eyes on Fed Taper
Washington (Dec 6) U.S. employers hired more workers than expected in November and the jobless rate fell to a five-year low of 7.0 percent, heightening expectations the Federal Reserve will soon start ratcheting back its bond-buying stimulus.
Nonfarm payrolls increased by 203,000 new jobs last month, the Labor Department said Friday.The unemployment rate dropped three tenths of a percentage point to its lowest level since November 2008 as some federal employees who were counted as jobless in October returned to work after a 16-day partial shutdown of the government.
Economists polled by Reuters had forecast payrolls rising only 180,000 last month and the unemployment rate falling to 7.2 percent from 7.3 percent.
Job gains for September and October were revised to show 8,000 more jobs created than previously reported, lending more strength to the report. Other details were also upbeat, with employment gains across the board, average hourly earnings rising and the workweek lengthening.
In addition, the jobless rate fell even as the participation rate -- the share of working-age Americans who either have a job or are looking for one -- bounced back from a 35½-year low touched in October.
"The U.S. labor market is still far from healed, but it certainly is moving in the right direction," said Eric Stein, co-director of the Global Income Group at Eaton Vance Investment Managers in Boston.
U.S. stocks bounced higher at the open, the dollar rose against the euro and the yen, and U.S. benchmark Treasury yields hit a three-month high as traders increased bets the Fed could reduce its bond purchases as early as its next meeting on Dec. 17-18.
The central bank has been buying $85 billion in Treasury and mortgage-backed bonds each month to hold long-term borrowing costs down in a bid to spur a stronger economic recovery.
Despite the jobs data, many economists said the central bank was still likely to hold off reducing its purchases until January or March to ensure the economy was on solid ground.
"This number puts a December taper on the table, but it isn't a certainty," said Stein.