U.S. Markets closed

Job report strongest in almost three years, how will Fed react?

Kevin Chupka
Executive Producer/Writer

The monthly jobs number is in and it came gift wrapped with a bright shiny bow for the holidays. In November the U.S. economy added 321,000 jobs. That the biggest monthly number since January of 2012. The unemployment rate came in at 5.8% for the second straight month, and September and October revisions added another 44,000 to the job roll.

Unemployment Rate & Newly Employed for the US | FindTheBest

“Santa Claus himself could not have delivered a better looking present this morning,” said Bankrate.com’s Washington Bureau Chief Mark Hamrick. He further noted that the jobs added were in meaningful industries such as healthcare, manufacturing, construction, professional business services, and retail.

As Reuters reported:

November marked the 10th straight month that job growth has exceeded 200,000, the longest stretch since 1994 and further confirmation the economy is weathering slowdowns in China and the euro zone, as well as a recession in Japan…

...The report provided the latest sign that a strengthening jobs market is starting to spur faster wage growth, a key factor that will help determine the timing of the U.S. central bank's first rate hike.

Average hourly earnings rose by 9 cents in November, the largest increase since June of last year.

The focus now turns to Janet Yellen and the Federal Reserve. Will data like this spur a rise in interest rates? The language from the FOMC has remained largely the same for months. The Open Market Committee's latest statement read:

The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. However, if incoming information indicates faster progress toward the Committee's employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

Hamrick says it will take more than a strong November to move Yellen's timeline up. “If we get a number of months where we see truly accelerating jobs creation, not just one month, then I think maybe the Fed has to think about a change in the calendar,” he told Yahoo Finance.

More from Yahoo Finance:
Holiday economy: 3 things we learned this week
Europe's dysfunction makes for more trading opportunities
How to trade like the world's biggest hedge fund