Employers added a better-than-expected 203,000 jobs in November, continuing a solid string of payroll gains and offering further evidence of a strengthening economic recovery.
The unemployment rate fell to 7% from 7.3%, the lowest in five years, the Labor Department said Friday.
Unemployment rose in October because the federal government furloughed about 450,000 workers during the 16-day shutdown. The jobless rate, in turn, was expected to fall in November as those employees were back at work.
In a survey by Action Economics, economists' median forecast was that 180,000 jobs were added last month. Expectations for the closely-watched job numbers were raised after the government reported that jobless claims fell to a three-month low last week and a private payroll survey showed businesses added 215,000 jobs in November.
"The overall strength of the jobs recovery has definitely increased to a somewhat higher gear," says Pat O'Keefe, a former senior Labor official and director of economic research at Cohn Reznick.
The solid report is sure to add to speculation about whether the Federal Reserve will begin to taper its economy-boosting program of monthly bond purchases at its Dec. 17-18 meeting. O'Keefe believes the Fed will hold off, noting much of the unemployment rate decline since September is a result of Americans dropping out of the labor force rather than job growth. And some sectors, such as retail, are still adding just modestly to payrolls, he says.
Still, the economy and labor market are picking up despite ongoing budget standoffs in Washington. Paul Ashworth of Capital Economics says the November report "gives the Fed all the evidence it needs to begin tapering" this month.
Businesses added 196,000 jobs last month. Federal, state and local governments added 7,000. Strong gains in transportation and warehousing, health care and manufacturing led the job growth.
Job gains for September and October were revised up by a total 8,000. September's were revised to 175,000 from 163,000 and October's to 200,000 from 204,000.
The economy has gained more than 2 million jobs so far this year, the most since January-November, 2005. Payroll additions in the past four months now average 204,000.
Other barometers of the labor market last month were also encouraging. The average workweek rose to 34.5 hours from 34.4 hours. Employers often pile more hours on existing workers before adding new ones. And average hourly earnings rose four cents to $24.15.
Another possible signal of future hiring is that the number of temporary employees increased by 16,000. Companies typically bring on contingent workers before adding to permanent staff.
And a broader measure of joblessness called the underemployment rate — which includes part-time employees who prefer full-time jobs and those who've given up looking for work, as well as the unemployed —fell to 13.2% from 13.8%. Much of that decline was likely due to the return of furloughed federal workers.
The economy and labor market have proved resilient lately despite the shutdown and the prospect of another Washington budget battle over the next month.
This week, the government revised up its estimate for third-quarter economic growth to an annual rate of 3.6% from 2.8% and measures of recent manufacturing activity and home sales both picked up more than anticipated.
In November, education and health services led job gains with 40,000. Professional and business services added 35,000, transportation and warehousing, 30,000 and retailers, 22,000. Manufacturing and construction, both key sources of middle-income jobs that laid off millions of workers in the recession, are showing signs of strength. Manufacturers added 27,000 jobs as the effects of the European recession and federal spending cuts ease. And construction firms added 17,000 jobs amid a continuing housing recovery.