There can only be one word for the November jobs report: Wow! For months, the American labor market had been described as resilient, but you can make a case that it is a force to be reckoned with following the latest economic update on the jobs front. With less than a year until millions of voters heading to the polls, President Donald Trump must be clicking his heels over the numbers.
Jobs, Jobs, Jobs!
According to the Bureau of Labor Statistics (BLS), the U.S. economy created 266,000 new jobs in November, bringing the unemployment rate to a 50-year low of 3.5%. The market had penciled in a gain of 180,000 jobs.
The federal government also revised its October jobs figures from 128,000 to 156,000.
Hiring was strong across the board. The health care sector added 45,000 positions, the hospitality industry created 45,000 jobs, and professional services hired 31,000 workers. Government also increased employment levels by 12,000. Although manufacturing payrolls surged by 54,000, almost all the gains were generated from General Motors employees returning to work following a month-long strike. Because of the trade war, manufacturers have hardly created jobs this year.
Average hourly earnings rose seven cents, or 0.2%, to $28.29 per hour, which brings the 12-month rate to 3.1%. The average weekly hours were unchanged at 34.4 hours. The labor force participation rate dipped 0.1% to 63.2%.
The general picture of the labor market is that businesses are hiring at a reasonable pace and they are handing out fewer pink slips to workers. The latest initial jobless claims slumped to 203,000.
A Bull in a China Shop
Financial markets are rallying on the news, giving some year-end momentum to a raucous arena. To open the market, the Dow Jones rose 230 points, the S&P 500 climbed 0.75%, and the Nasdaq jumped 0.8%. The US Dollar Index, which is a measurement of the greenback against a basket of currencies, soared 0.23% to 97.64. The ten-year Treasury note advanced to 1.852%.
All About the Data
It has been a good start to the month for the U.S. economy.
The IHS Markit manufacturing purchasing managers’ index (PMI) rose from 51.3 to 52.6 in November – anything above 50 indicates expansion. The services PMI came in at 51.6 last month, up from 50.6 in October. The Institute for Supply Management’s (ISM) non-manufacturing PMI fell short of market expectations at 53.9, but it has remained in expansion territory for nine years.
On the trade front, the U.S. trade deficit slipped to its lowest level in 18 months to $47.2 billion in October. Imports fell 1.7% to $254.3 billion and exports dipped 0.2% to $207.1 billion. However, for the first ten months of 2019, the trade deficit has totaled $520.1 billion. During the same time a year ago, the trade imbalance was $513 billion.
A Path to Victory
If the U.S. economy can continue posting these numbers with less than a year until the election, then it would be difficult to predict a loss for President Donald Trump. Jobs are being created, wages are rising, and stocks are enjoying record highs – all three factors benefit everybody, except for the professional protesters who spend their entire time carrying placards and shouting rhymes.
With the Federal Reserve ramping up the printing presses and lowering interest rates to historic lows again, it is hard to conceive a steep slow down anytime soon. And this is bad news for the Democrats, who have already conceded that the economy is doing well, causing candidates to encouraging voters to look beyond the gains and concentrate solely on Russia and racism.
Can a booming economy outweigh neo-McCarthyism in 2020? The Democrats hope not.
Read more from Andrew Moran.