WASHINGTON – The jobless rate dropped to a five-year low of 7 percent in November as American employers added more workers than forecast, showing further progress in the labor market that will provide a spark for the world’s largest economy.
The 203,000 increase in payrolls followed a revised 200,000 advance in October, the strongest back-to-back gain since February-March, Labor Department figures showed Friday in Washington. The median forecast of 89 economists surveyed by Bloomberg called for a 185,000 advance.
The pickup in employment, combined with faster wage gains and more hours, provides American workers with the means to spend and signals companies are confident that demand will improve. The dollar rallied on bets that the figures may prompt Federal Reserve policy makers to advance their timetable for a tapering of the bond purchases aimed at boosting growth.
“The labor market is healing,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Ala., who projected a 201,000 gain in payrolls. “We have seen pretty consistent job growth, and we do expect to see it over 200,000 on a monthly average basis next year. We expect the overall rate of growth to pick up.”
The gain in employment was the biggest in three months. Estimates in the Bloomberg survey for payrolls ranged from increases of 115,000 to 230,000. Revisions to prior reports added a total of 8,000 jobs to overall payrolls reports in the previous two months.
The Standard & Poor’s 500 Index jumped 0.9 percent to 1,801.29 at 9:35 a.m. in New York. The dollar rose the most in two weeks against the yen, climbing to 102.74 yen from 101.79 late yesterday. Benchmark 10-year yields increased as much as six basis points, or 0.06 percentage point, to 2.93 percent before trading little changed at 2.87 percent
Factories in the U.S. took on the most workers since March 2012, employment in construction accelerated and payrolls in transportation and warehousing picked up, today’s figures showed.
The unemployment rate, derived from a separate Labor Department survey of households rather than employers, was forecast to fall to 7.2 percent. In October, joblessness rose for the first time in five months, reflecting workers furloughed during a federal government shutdown that lasted half the month.
Among those finding work was Edward Jamgotchian, 50, a father of two who lives in Walnut Creek, Calif. Last holiday season, he lost his job as an information security manager at Pensco Trust Company in San Francisco, where he had worked for eight years.
“I felt that initially, the job market was very tight based on the number of positions that were available, but towards the middle of the year I sensed that things were getting moving and more positions were being posted,” he said.