The U.S. unemployment rate fell to a nine-year low of 4.6 percent in November, as employers added another 178,000 jobs, making it almost certain that the Federal Reserve will raise interest rates later this month.
The unemployment rate hit its lowest level since August 2007 because more people found work but also because the labor force shrank as more people retired, lowering the number of working-age people in the labor force to 62.7 percent.
U.S. nonfarm payrolls increased by 178,000 jobs last month after increasing by 142,000 in October, the Labor Department said on Friday.
Economists had forecast payrolls rising by 175,000 last month and the unemployment rate remaining unchanged at 4.9 percent.
“The decline in the unemployment rate and the unambiguous decrease in labor market slack are likely to place further upward pressure on inflation. This report easily clears the bar for a December rate hike,” said Michael Gapen, chief economist at Barclays in New York.
Wages slipped for the first time in nearly a year though after two straight months of increases. Economists partially blamed the drop in average hourly earnings on a calendar quirk, which they expect Fed officials will overlook at their Dec. 13-14 policy meeting.
Average hourly earnings fell three cents, or 0.1 percent, after rising 0.4 percent in October and gaining 0.3 percent in September. Average hourly earnings fell for workers in mining, manufacturing and utilities in November.
Last month’s drop in wages lowered the year-on-year gain to 2.5 percent in November from October’s 2.8 percent increase, which was the largest rise in nearly 7-1/2 years.
“This is likely to be a temporary setback, as further tightening in labor market conditions should increase competition for skilled labor and support stronger wage growth,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.