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A fourth straight month of solid hiring cut the U.S. unemployment rate to a five-year low of 7 percent in November, an encouraging sign for the economy.
The Labor Department says employers added 203,000 jobs, nearly matching October’s revised gain of 200,000. The job gains helped lower the unemployment rate from 7.3 percent in October.
The strengthening job market is likely to fuel speculation that the Federal Reserve may start to scale back its bond purchases when it meets later this month.
The economy has now generated an average of 204,000 jobs from August through November. That’s up from 159,000 a month from April through July.
Many of the November job gains were in higher-paying industries. Manufacturers added 27,000 positions, the most since March 2012. Construction firms gained 17,000.
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From NPR and WBUR Boston, I'm Jeremy Hobson.
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HOBSON: But first to today's jobs report. The Labor Department said today that employers added 200,000, 203,000 jobs last month in the U.S., which sent the unemployment rate tumbling by three-tenths of a point to seven percent, that's the lowest level in five years. And it's been a very good week for economic data.
Government and industry reports have showed this week auto and home sales surging, manufacturing gaining and the trade deficit narrowing. Also overall growth, GDP, shot up to 3.6 percent in the third quarter. That was much better than originally reported.
Here to discuss is Marilyn Geewax, senior business editor for NPR. And Marilyn, let's start with the jobs report from today, 203,000 jobs added, and the unemployment rate, as we said, down to the lowest level in five years.
MARILYN GEEWAX, BYLINE: It almost freaks me out to even be saying this after all these years of bad news, but this is a really great jobs report. there's - you keep going through it, and gosh, you know, in every category, everything looks a lot better. Now that doesn't mean there aren't still huge problems, of course. I'll get to that in a moment.
But first, all of this good news. We really saw the unemployment rate come down a lot but not because people were leaving the job market. Actually the labor force participation rate has held up pretty well. You know, it's unchanged. But the population is growing, and as the population grows, we're adding enough jobs to absorb those people.
So you really saw just a much more encouraging report. So some of the things that I found, you know, particularly cheery about this was that they were good jobs. These are manufacturing jobs, construction jobs. So much of what we've seen in recent years has been more like, you know, lower-wage jobs: retail jobs, hospitality, those kind of things.
But this month we saw 22,000 new retail jobs but 27,000 manufacturing jobs.
HOBSON: But, you know, a lot of economists even a couple of months ago with the debt ceiling fight and budget negotiations hitting a wall in Washington were saying this is going to be a terrible fall and winter because holiday spending will be down because people are concerned. And the economic growth just wasn't there.
So what happened? And you mentioned that you see some signs that things may be not all rosy. Tell us what those are.
GEEWAX: Well, the momentum just seems to be a lot stronger than what we were thinking. When the government shut down in October, that was pretty disruptive. That was really weird and, you know, a lot of small businesses got hurt because they're government contractors, and you can see in these numbers among the bad things for a lot of workers is federal jobs are way down.
Federal government employment declined by 7,000 jobs in November. So those budget cuts are kicking in. People are retiring from the federal government and not being replaced. So we do see some shrinking in these government jobs, but what's surprising in this report is that the economy really bounced back in November.
Construction jobs were up. Health care employment is up. People were also getting raises. We see year over year people are actually a little bit ahead of the rate of inflation. So that's encouraging. Hours are a little longer. And this idea that we were going to see a surge in part-time workers, that people don't want to hire fulltime workers, is not being borne out by this data.
We're seeing that companies actually are hiring fulltime. Now, you know, it's a dicey economy. We still haven't figured out a budget. Maybe the government could even shut down again in January. All kinds of things could go wrong. But it is sort of comforting that for at least month we have a lot of good news across the board with hours worked, wages, fulltime employment.
Now I just want to say one bad thing, though, and here it is, that when you look at long-term unemployed, there's still 4.1 million people who haven't had a paycheck in 27 weeks or more. That's tough.
HOBSON: Well, and you wonder what that means for the Fed because the Fed is going to be looking at all of this as they try to figure out whether to pull back on their stimulus.
GEEWAX: Right, trying to sort out, for the Federal Reserve, they are trying to decide whether or not to send - take actions that effective shove interest rates up a little bit to slow the economy down. You don't want to overheat it. But you don't want to do that too soon and cut off this job growth.
So on the one hand you've got almost, you know, 11 million people still out of work, and, you know, four - more than four million of them long-term unemployed. So the Fed doesn't want to do anything to dampen the economy too soon, but on the other hand with a strong report like this it probably starts to lay the groundwork for the Fed moving towards higher interest rates in 2014.
HOBSON: And maybe even starting to taper the stimulus even sooner.
GEEWAX: Well that's - yes.
HOBSON: We saw Bill Gross, the head of Pimco, the largest bond fund in the world, saying today that he thinks it could start as soon as this month. So we'll have to see. Marilyn Geewax, senior business editor at NPR, thanks as always.
GEEWAX: Oh, you're welcome. Transcript provided by NPR, Copyright NPR.