U.S. employers added 203,000 jobs in November and the unemployment rate dipped to 7% from 7.3% -- a five year low.
Job growth tended to be concentrated in high-paying industries, with manufacturers adding 27,000 jobs and construction firms adding 17,000. The labor participation rate also rose to 63% from 62.8% in October. Average hourly wages increased by 4 cents to $24.15 and the average workweek increased slightly (0.1 hour) to 34.5 hours.
These numbers top off a week of better-than-expected economic data. The U.S. economy grew at a pace of 3.6% in the third quarter of 2013; the ADP employment report for November showed an increase of 215,000 private sector jobs; November ISM improved to 57.3%; auto sales rebounded to a 16.4 million annual rate and new home sales grew to a 440,000 annual rate.
So is the economy as strong as it appears to be?
Not exactly, say some economists. November jobs numbers recieved a boost partially because of sequestered government workers heading back to work after the shut down and because of a late start to the holiday season.
The increase in Q3 GDP was largely due to the stockpiling of private inventories. In fact, inventory growth accounted for nearly half of the revised number. Inventories are volatile and some economists worry that they could cause the U.S. economy to take a turn for the worst in Q4. Analysts at BNP Paribas warned that we may, "see a drag from an inventory drawdown in Q4."
Still, some believe that these economic indicators mean the U.S. is heading in the right direction.
“I think the economy is gaining traction,” says Mark Zandi, chief economist for Moody’s Analytics. “We’ve got some more hurdles, the budget battles in Washington need to be nailed down early next year but I’m growing more confident that this economy is going to enjoy much stronger growth next year."
Zandi sees U.S. GDP growing by 3% in 2014 and around 4% in 2015.
“This seals the deal on tapering at one of the next three [FOMC] meetings,” says Zandi. “My suspicion is it will be March but if you told me it would be in January or December I wouldn’t be too surprised.”
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