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The Implications of Another Strong Jobs Report

A strong November Employment Report plus upward revisions to the blowout October report suggest the economy has good momentum in the always-important fourth quarter.

Solid numbers across the board in the report nearly guarantee a Fed rate increase later this month.

However, growth is still likely to be moderate by historical standards as a strong dollar, weak commodity prices, and slow global growth offset domestic strength. As a result, the Fed is likely to remain cautious during the process of policy normalization, implementing future rate hikes only at a very gradual pace.

The November Employment Report showed broad strength, with the economy adding 211,000 jobs for the month, including 197,000 from the private sector. Prior months were revised higher by a combined 35,000 in September and October. The October gain now stands at a robust 298,000 new jobs added for the month.

Increases in payrolls were broad-based, led by private services, particularly Education & Health Care, Leisure & Hospitality, Professional & Business Services, and Retailing.

Construction industries added 46,000 jobs, the third strong month in a row.

Wages were up 0.2 percent for the month, and a 2.3 percent rate over the past 12 months.

The length of the average workweek declined to 34.5 hours from an upwardly revised 34.6 hours in October.

When hours are combined with payroll gains and wages, the index of aggregate hourly earnings, a proxy for take-home pay, rose 0.1 percent for November and 4.2 percent over the past 12 months.

The unemployment rate held at 5.0 percent while the participation rate increased to 62.5 percent.

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