Calm Employment Scenario Could Mean Sooner-than-Expected Rate Cut

The U.S. employment picture was relatively calm in November, leading many analysts to believe that U.S. economic growth is slowing enough to allow the Federal Reserve to cut interest rates sooner than expected. The unemployment rate edged up to 4.0% -- the rate has been within the 3.9% - 4.1% range since October

The U.S. employment picture was relatively calm in November, leading many analysts to believe that U.S. economic growth is slowing enough to allow the Federal Reserve to cut interest rates sooner than expected. The unemployment rate edged up to 4.0% -- the rate has been within the 3.9% - 4.1% range since October 1999 -- and the manufacturing industry saw no change for a second consecutive month. Average hourly earnings continued to rise, pushing the 12-month gain to the 4.0% level.

Total nonfarm payroll increased by 94,000, according to the Labor Department's November 2000 Employment Report, lower than analyst expectations. A deeper look shows:

  • Federal and local government job losses pulled government employment down 54,000.
  • Construction followed two consecutive strong gains with no change in November, primarily due to weather. 
  • The services industry gained 65,000 new jobs.
  • Retail trade increased 46,000.
  • Wholesale trade employment increased by 14,000, most occurring in nondurable goods distribution. 
  • For the second consecutive month, new jobs in air transportation and communications helped grow employment in transportation and public utilities, this time by 16,000.

For the second month in a row, the manufacturing industry saw no change in employment; this steady trend follows a combined loss of over 180,000 jobs in August and September. Job declines in nondurable goods were offset by durable goods job increases. Some of the highlights and lowlights are below.

  • Electronic components continued its strong growth with 8,000 new jobs.
  • Industrial machinery added 6,000 jobs.
  • Instruments and related products increased by 4,000.
  • Rubber and plastics dropped by 4,000.
  • Textiles and apparel continued to decline.

At a Glance: Hours and Earnings

  • The manufacturing workweek declined 0.3 hour to 41.1 hours; overtime also declined to 4.3 hours, down 0.2 hour.
  • Average hourly earnings rose 6 cents to $13.94, helping to raise earnings 19 cents in the last four months.
  • Average weekly earnings increased by 0.1% to $478.14.
  • Over the past 12 months, average hourly earnings and weekly earnings have increased by 4.0% and 3.3%, respectively.

The report on December employment will be released on January 5, 2001.

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