Employers added a solid 94,000 jobs to their payrolls in November, the unemployment rate held steady at 4.7 percent and wages grew briskly, encouraging signs the nation’s employment climate is holding up in the face of turbulence in the housing and credit markets.
The fresh snapshot of the labor market, released by the Labor Department on Friday, showed that hiring was brisk in education and health services, retail, professional services, the government and elsewhere. That helped to offset job losses in construction, manufacturing and financial services — casualties of the housing slump and credit crunch.
The 94,000 new jobs in November came after a surprisingly strong payroll gain of 170,000 in October. The unemployment rate stayed at a relatively low 4.7 percent for the third straight month.
“This is reassuring. The pillar continuing to support the economy is job creation,” said Carl Tannenbaum, chief economist at LaSalle Bank. “This should provide reassurance to those who worry that a recession is imminent,” he said.
The performance was better than economists were expecting. They were forecasting that the unemployment rate would nudge up to 4.8 percent and they also said they thought employers would boost payrolls by around 70,000.
The health of the nation’s job market is a key factor determining whether the economy will survive stresses from the housing collapse and credit crunch.
Job and wage growth have been shock absorbers, helping individuals to cope with all the negative forces in the economy. The mostly sturdy employment climate has helped to support spending by individuals, a major shaper of overall economic activity.
Still, a lingering fear among economists is that consumers will cut back on their spending, throwing the economy into a tailspin. The odds of a recession have grown this year, although Federal Reserve officials, the Bush administration and others are hopeful the country can avoid one.
To stave off the possibility of a recession, the Federal Reserve has sliced a key interest rate twice this year. Many expect rates to be lowered for a third time when policymakers meet next Tuesday. Given the strength of Friday’s employment report, a smaller rate reduction of one-quarter percentage point seems more likely as insurance against undue weakening in the economy.
Workers with jobs saw brisk wage growth.
Average hourly earnings rose to $17.63 in November, a 0.5 percent increase from the prior month. That marked the biggest monthly gain since June. The only other time the monthly gain was higher was in October 2005. Economists were expecting a more moderate rise of 0.3 percent. Over the past 12 months, wages grew by 3.8 percent.
Solid wage growth supports consumer spending, a vital ingredient to a healthy economy. But a sustained and rapid pickup in wages — if not blunted by other economic forces — can stoke inflation, which can eat into any wage gains.
Overall, the employment and wage figures were encouraging because they suggested the labor market is not cracking under all the strains plaguing the economy.
The housing and mortgage markets have melted down. Home foreclosures have soared to record highs. Credit has dried up. Lenders have been forced out of business. Financial companies have wracked up billions of dollars worth of losses from bad subprime mortgage investments.
Against this backdrop, Wall Street has endured a fresh bout of turbulence in recent weeks.
Given these stresses, the economy, which logged its strongest growth in four years in the third quarter, is expected to slow to a pace of just 1.5 percent or less in the current October-to-December period.
Economic uncertainties are coloring peoples’ views of President Bush’s stewardship. His approval rating on the economy was just 36 percent in December, according to an AP-Ipsos poll. The meltdown in the housing and mortgage markets has raised dangers to the economy and created headaches for politicians. The mess has given Republicans and Democrats plenty of fodder to point blame at each other.