WASHINGTON – A fourth straight month of solid hiring in November could give the U.S. economy a jolt and signal that the job market may finally be gathering momentum.
Economists are forecasting that employers added 180,000 jobs last month, according to a survey by FactSet. That would follow October’s robust gain of 204,000. And it would keep the average monthly gain for the past four months at around 200,000.
The unemployment rate is expected to fall back to 7.2 per cent from 7.3 per cent. That would match a five-year low reached in September. Still, the rate remains above historically healthy levels of between 5 per cent and 6 per cent.
The Labor Department will release the November jobs report at 8:30 a.m. Eastern time Friday.
More jobs would follow other encouraging data reported in the midst of the crucial holiday shopping season. Growth is accelerating, corporate profits are rising and companies are laying off the fewest workers in six years.
“The momentum looks strong,” said Chris Rupkey, chief economist at the Bank or Tokyo-Mitsubishi.
Hopes for a robust finish to 2013 still hinge on strong hiring. The recovery from the Great Recession that ended 4 1/2 years ago has come in fits and starts. Growth has yet to reach the acceleration that defined U.S. economic recoveries for much of the past half century.
Even Thursday’s government report that the economy grew at a robust annual rate of 3.6 per cent from July through September was hardly cause for celebration.
Nearly half the growth came from businesses building up their stockpiles, a temporary factor. Excluding stockpiling, annual growth last quarter was a mere 1.9 per cent.
Unless consumers step up spending during the holiday season, stockpiling is likely to slow.
Most economists foresee a sharp slowdown in growth during the October-December quarter as businesses do less stockpiling. Early estimates for economic growth are at or below an annual rate of 1.5 per cent.
Paul Ashworth, chief U.S. economist at Capital Economics, cautioned that a drop in fourth-quarter growth might not necessarily signal a weakening economy. Ashworth noted that the report on third-quarter growth showed that business sales surged, corporate profits rose, income grew and Americans saved more.
Still, the economy needs more jobs to sustain its strength. The economy has added a solid average of 202,000 jobs a month from August through October. And the number of people applying for unemployment benefits has fallen over the past month back to mid-2007 levels. That signals fewer layoffs and further job gains in November.
Job growth has a dominant influence over much of the economy. If hiring continues at the current pace, a virtuous cycle starts to build. More jobs usually lead to higher wages, more spending and faster growth.
Stronger corporate profits this year might also enable the creation of higher-paying jobs. More than half the jobs that have been added in the past six months have come from four low-wage industries: retail; hotels, restaurants and entertainment; temp jobs; and home health care workers.
The Federal Reserve has pegged its stimulus efforts to the unemployment rate. Chairman Ben Bernanke has said the Fed will ease its monthly purchases of $85 billion in bonds once hiring has improved consistently.
The recent economic upturn has been surprising. Many economists expected the government shutdown in October to hobble growth. Yet the economy motored along without much interruption, according to several government and industry reports.
Early reports on holiday shopping have been disappointing. The National Retail Federation said sales during the Thanksgiving weekend — probably the most important stretch for retailers — fell for the first time since the group began keeping track in 2006.
But those estimates exclude autos, home sales and movies, three major consumer categories. Auto sold in November at their best pace in seven years, according to Autodata Corp. New-home sales in October bounced back from a summer downturn.
Stuart Hoffman, chief economist for PNC Bank, downplayed concerns that holiday sales might be sluggish. “Consumers, once again, their demise has been greatly exaggerated,” he said.