Robust Job Growth Shows Economy Withstood Storms

U.S. employers got back on the hiring track and added a net 215,000 nonfarm payroll jobs in November, the government reported Friday, demonstrating the economy’s resilience after devastating storms and surging energy costs.

The job gain, the latest in a series of positive economic data, could bolster consumers’ confidence entering the peak holiday shopping season, analysts said. And it could signal that workers may enjoy stronger wage gains as the employment market tightens.

“The growth in jobs should help consumer spending remain on an upward trend even as the housing market is starting to cool,” said Lynn Reaser, an economist with Bank of America in Boston.

The November job increase, paced by a jump in construction employment related to post-hurricane rebuilding, far surpassed subpar gains of 44,000 positions in October and 17,000 in September, the Labor Department reported. Job creation in those months was revised upward by a net 13,000.

The gain, which met economists’ expectations, was the best showing since July and beat the 196,000 monthly average increase in the first eight months of this year. The unemployment rate remained unchanged at 5%, just off the four-year low of 4.9% set in August.

The job boost is the latest evidence that the U.S. economy has shaken off the ravages of hurricanes Katrina and Rita in the Gulf Coast and consequent higher gasoline and natural gas prices.

The government reported this week that the economy grew by a 4.3% annualized pace in the third quarter, far above the historical average near 3%. Other recent reports signaled strength in business spending, consumer confidence, new-home sales and retail sales.

“The job market was carrying plenty of momentum when the hurricanes hit, and is now getting back on track,” said Nigel Gault, U.S. economist for Global Insight, a research firm in Waltham, Mass. “The economy has proved remarkably resilient.”

Eager to tout good news amid the lowest approval ratings of his administration, President Bush put the best light on the job report and other rosy economic data. “Our economic horizon is as bright as it’s been in a long time,” Bush said.

“Economic activity appears to be expanding at a reasonably good pace as we head into 2006,” Federal Reserve Chairman Alan Greenspan said Friday.

Job creation was dismal in September and October as employers took a wait-and-see attitude after the hurricanes.

The job market has rebounded thanks to several factors, economists said. Lower oil and gasoline prices are encouraging consumers to open up their pocketbooks just in time for the holidays.

Expectations of decent consumer spending, in turn, are emboldening businesses to hire more people.

Businesses are adding workers to replenish low inventories of goods. And companies flush with cash thanks to strong profits are spending some of it on machinery and technology.

The November job report showed broad hiring across numerous industries, including those with higher-paying jobs. Manufacturing, retail trade, information, education and health services, and leisure and hospitality posted gains above their average for the last six months, said Scott Anderson, senior economist at Wells Fargo Bank in Minneapolis.

Construction added 37,000 jobs, followed by education and health services with a 36,000 rise. Retail trade added 9,000 positions, a number that could grow into the holiday season.

Manufacturing added 11,000 jobs, its second consecutive monthly job increase and “the first time that’s happened in more than a year,” said David Huether, chief economist for the National Assn. of Manufacturers.

The question for many workers and analysts is whether the job market will tighten enough to push wages significantly higher. Since the 2001 recession, the pace of pay increases has lagged behind inflation.

The latest job report suggested that wage pressures were modest last month. Average hours worked per week fell 0.1 hour to 33.7 hours, while average hourly earnings rose a modest 0.2% to $16.32, after an 0.6% rise in October, the Labor Department reported.

On a year-over-year basis, however, wages were up 3.2%, a more robust figure that suggested workers were beginning to enjoy heftier pay boosts.

“We will see accelerating wage growth going into next year,” said Mark Zandi, chief economist at Moody’s Economy.com, a research firm in West Chester, Pa. Because a 5% unemployment rate suggests that the job market is tightening, “employees will regain some negotiating power,” he said.

Rising wages, although welcome news for workers, may not necessarily cheer investors who are hoping that the Federal Reserve will soon halt its anti-inflation program of raising short-term interest rates.

The Fed is expected to boost its benchmark rate by a quarter point to 4.25% when it meets Dec. 13. Some economists predict that the central bank may not stop until the rate hits 4.75% or 5% next year.

Times staff writer Warren Vieth in Washington contributed to this report.