The U.S. Department of Labor reported Friday that 321,000 jobs were added in November. The reported number is the highest in three years. The labor department further reported a surprising gain in average hourly wages. The question of if the U.S. job report indicate a rise in American’s earnings is on most people’s minds.
Over the past 12 months ending in November, average hourly earnings grew by 2.1 percent. The unemployment rate was unchanged at 5.8 percent. Job gains were widespread, and were controlled by development in retail trade, professional and business services, health care, and manufacturing. The report incorporates revisions for September and October, which increased total employment by 44,000. Monthly employment increases have averaged 278,000 over the past 3 months. In the 12 months prior to November, employment growth averaged 224,000 per month.
Many economists agree that one month’s report is not enough to evaluate the future job wages of American workers but think that the November U.S. job report indicates a rise in American’s earnings. The hourly wage earnings could reflect the beginning of the holiday season, therefore, a three to four month trend of these numbers would need to be assessed.
Since November’s employment gain was the highest in three years, many experts are saying that the Federal Reserve will be raising short-term interest rates early next year. Interest rates have been close to zero since 2008. Some experts think interest rates will rise as early as March, 2015 while others are suggesting more like June.
Many were concerned that the investors on Wall Street would become cautious due to rumors of interest rate hikes. However, traders seemed to be unconcerned as the stock market on Friday, appeared to be generally unaffected by the current job report. The real estate sector has made steady strides toward recovery which is a sign that the economy is improving. However, the real estate market could possibly become negatively affected by an interest rate increase.
Even though jobs are being created, wages for working American’s are still not growing and remain at about 2 percent increase each year. This could inevitably slow the real state market’s progress which is why some economist are hopeful that the Federal Reserve will not raise the interest rates anytime soon. For the most part, Economist seem to be positive about the direction of wage growth for the future. However, most agree there is a need for the current trend to stabilize. Since the U.S. labor report is revised each month to properly calculate sluggish returns, it is simply too early to forecast the future job growth accurately.
The good news is that although the Labor Department generally adjust their numbers to include holiday trends and other factors, the increase in jobs for November is still higher than expected and with the reduction of gas prices, and the results of the past month’s reports, it does seem that the November U.S. job report indicates a rise in American’s earnings. Nevertheless, many agree that for wages to show any real promise, the unemployment rate will need to significantly decrease.
By Kelara Pumphrey