Solid hiring and an unemployment rate still near a five-year low reinforced the upbeat view of optimists, including the Federal Reserve, that the US economy is weathering the downturn in the housing and automotive sectors.
Payrolls outside agriculture rose by 132,000 jobs last month, and revisions added 42,000 jobs to previous payroll estimates for September and October, so monthly gains in the past three months have remained near this year’s average of 149,000. The unemployment rate edged up slightly to 4.5% in November from 4.4%. Un-rounded, the increase was even smaller: from 4.42% to 4.47%.
Layoffs in construction and manufacturing — in particular, the auto industry — were more than offset by gains in business services, health care and tourism, the Labor Department said.
“This just confirms what the Fed’s been thinking,” said Drew Matus, senior economist at Lehman Brothers in New York. “The economy is currently experiencing weakness in two specific sectors, and the weakness hasn’t spread.”
The debate on the immediate future of the US economy continues to rage. This latest news will buoy the optimists, but financial market participants are still concerned at the risks to inflation, which is noticeably above the US Fed’s preferred range.
With “tight” (Ben Bernanke’s description) labour markets, and wages growing at an uncomfortable 4.1% annual rate, the Fed will not be easing monetary policy anytime soon.
Henry’s Raff Report hints that the current weakness of US growth may soon be coming to an end. More generally, at the global level, another upside surprise is more likely than not.
“Next year is sure to hold surprises that in terms of demand from Eastern & Western Europe, Brazil and emerging Asia, the risk is probably to the upside – we have to remember that most of the “experts” missed forecasting China’s extraordinary growth ahead of 2002-2005, they seem to have largely dismissed India and probably have not a clue about Brazil and Russia for that matter. Russia’s plans for revitalizing its power-generating and distribution industries seems little known — US$90Bn starting with US$27Bn in 2007.”
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