US jobless rate falls to five-year low in November

A woman at a jobs fair in Maryland in the US There has been strong US jobs growth in the past four months

Related Stories

The US unemployment rate fell to a five-year low of 7% in November, according to the US Labor Department.

Payroll figures also showed that 203,000 jobs were created last month, more than predicted, as the US economy displayed encouraging signs of strength.

US markets cheered the news, with the Dow Jones Industrial Average spiking nearly 200 points.

The monthly non-farm payroll figure is watched closely by economists.

Analysts say these indications of strong growth could mean that the Federal Reserve will start to unwind its massive stimulus programme soon.

Outgoing chairman Ben Bernanke has previously said that when the unemployment rate dropped below 7%, the US central bank would end the $85bn-a-month bond buying programme known as quantitative easing.

"When asset purchases ultimately come to an end, the unemployment rate would likely be in the vicinity of 7 percent, with solid economic growth supporting further job gains," he said in June press conference, before later scaling back his firm target.

However, the November figure might have been distorted. Some federal workers who were counted as jobless in the October - because of the 16-day partial government shutdown - returned to their jobs last month.

Shoppers in a mall in the US US consumers are buying more clothes
Upwards trend

The latest data also showed that the October and September non-farm payroll figures, which had also been strong, were even better than their first estimates.

Job gains for those two months were revised upwards by 8,000.

Chris Williamson, chief economist at research firm Markit, said the data indicated the US labour market was "buoyant".

"The decline pushes the jobless rate down to its lowest since November 2008 and closer towards the Fed's threshold of 6.5%, which it wants to see breached before it considers tightening policy via higher interest rates," he said.

But he added that a decision on when the Fed might start to taper its stimulus programme was still not clear cut.

Traders at the New York Stock Exchange Analysts are closely watching economic data as they wait for signs that the Federal Reserve will alter its current policies

"The economic data have not been a one-way street, with numbers such as factory orders and business investment disappointing. There are signs that the pace of economic growth has begun to wane at least in part because business and households have become concerned about further fiscal fighting in Washington."

Consumer spending

The labour market figures follow news earlier this week that economic growth, as measured by GDP, in the third quarter of the year was revised up to an annual pace of 3.6% from a previous estimate of 2.8%.

Also on Friday, the US Commerce Department said that consumer spending increased in October, though wages and salaries were barely changed.

Consumer spending rose by 0.3%, compared with a 0.2% rise in September. The Commerce Department said that there had been an increase in purchases of manufactured goods such as cars, as well as higher spending on clothing, rent and utilities.

However, wages and salaries in the US increased by just 0.1% in October, following a 1% rise the month before.

More on This Story

Related Stories

From other news sites

* May require registration or subscription

More Business stories

RSS

Business Live

  1.  
    08:28: North Sea oil crisis
    North Sea Oil platform

    North Sea oil firms and service providers are cutting staff and investment to save money and the industry is "close to collapse" the independent explorers' association Brindex has said. Falling oil prices are now beginning to make North Sea oil production too costly it suggests. Brent Crude has now fallen below $60 per barrel and has fallen nearly 50% since the summer.

     
  2.  
    08:10: Sony cancels The Interview

    A cinema in Texas is replacing The Interview with "Team America: World Police" says Radio 5 live presenter Rachel Burden. That might make Texans feel a bit better about the hacking of Sony Pictures, which North Korea is thought to be involved in. As well as satirising gung-ho Americans Team America World Police ridicules Kim Jong-il, the father of North Korea's current leader Kim Jong-un. Take that North Korea!

     
  3.  
    07:56: Royal Mail privatisation Radio 5 live

    "There's a huge opportunity for financial institutions to game the system," Lord Myners tells Radio 5 live. He's talking about the process of "book building" whereby big investors like pension firms and insurers are approached and asked what they think a firm is worth. Transparent digital auctions would be a better way of fixing a price. says Lord Myners.

     
  4.  
    07:42: Royal Mail privatisation BBC Radio 4

    "I think actually the sale of Royal Mail was a well-balanced complex exercise and the government managed to achieve its objective, Lord Myners tells Today. When asked why UBS forecast a price of 450p for Royal Mail shares, around the time the 330p a share price was set, Lord Myners argues that is an example of the so-called "Chinese Walls" within investment banks working.

     
  5.  
    07:23: Sony cancels The Interview
    Movie poster for The Interview

    Jon Taplin who produced Martin Scorsese's Mean Streets and The Last Waltz makes some interesting points on Radio 5 live about Sony's withdrawing The Interview. He points out that the biggest US movie chain AMC is owned by a Chinese firm. Many movie theatres are in shopping centres and AMC says it was under pressure from those shopping centres who were worried that shoppers would stay away if The Interview was playing. (The hackers had warned of 911-style attacks).

     
  6.  
    07:08: Mobile phone coverage Radio 5 live
    mobile phone user

    There's been a "huge row" between mobile operators and companies says BBC technology correspondent Rory Cellan-Jones on Radio 5 live. The result is today's announcement that firms will invest £5bn in mobile kit to achieve 90% geographic coverage by 2017. That £5bn was going to be spent anyway says Rory, the companies wanted the government to abandon a "national roaming" scheme that they hated.

     
  7.  
    06:52: Local government pensions BBC Radio 4

    Local government pensions schemes are "staggeringly inefficient and a national embarrassment", according to the right leaning think-tank, the Centre for Policy Studies which has published a report calling for a radical overhaul of them. Currently 89 separate schemes in England and Wales are £47bn in deficit, it says. The report comes on the same day as the local government finance settlement.

     
  8.  
    06:48: Local council spending Radio 5 live

    Later this morning, councils in England will find out how much money they are likely to get from the government for the next financial year. Councils are expecting a 12% cut in their budgets. They are saying that the situation is "virtually unsustainable and services will start buckling under the strain", according to BBC political correspondent, Iain Watson. The government argues that councils have coped well with cuts so far, Iain says on Radio 5 live.

     
  9.  
    06:39: Royal Mail privatisation BBC Radio 4
    Royal Mail Glasgow

    The big problem for the government was judging the price and ensuring interest from institutional investors in Royal Mail, CCLA Investment Management's James Bevan tells Today. If shares were priced too high Royal Mail might not have attracted enough interest from institutional investors. That would have meant the shares would have lost value when they debuted on the stock market, and the government "gets accused of being greedy," Mr Bevan adds.

     
  10.  
    06:33: Royal Mail privatisation BBC Radio 4

    So the report into the stock market flotation of Royal Mail has been released but James Bevan, from CCLA Investment Management tells the Today programme the report tells us "very little about what actually happened. It's more of blueprint for what should happen in the future." He says the report seems to focus more on how to deal with institutional investors in any future privatisations.

     
  11.  
    06:27: Sony cancels The Interview Radio 5 live
    A banner for "The Interview"is posted outside Arclight Cinemas

    Sony Pictures has now cancelled the release of the film that provoked a cyber attack on the company. On Radio 5 live Steve Futterman, Los Angeles reporter for CBS Radio News, says it was primarily a business decision as five major theatre chains had abandoned the comedy (called The Interview), after the hackers made references to 911-style attacks. But Mr Futterman asks: Will the film have a video release or appear on a streaming service when the situation calms down?

     
  12.  
    06:19: US interest rates Radio 5 live

    "Markets are hugely relieved that the Fed will not be tightening rates any time soon," says James Bevan, from CCLA Investment Management. On Radio 5 live Mr Bevan says the markets are now betting there will not be a rise in interest rates during the next calendar year.

     
  13.  
    06:12: Cuba new era Radio 5 live
    Havana

    "It's quite a dramatic and unexpected step," says Phillip Oppenheim, managing director of coffee company, Alma de Cuba. That's after President Barack Obama announced moves to normalise diplomatic and economic ties. Mr Oppenheim thinks that announcement could make a real difference in two or three years time. He says that Cuba is very slowly being liberalised. It's become easier to set up small businesses, for example.

     
  14.  
    06:09: Royal Mail privatisation Radio 5 live

    Peter Hahn from Cass Business School explains that big institutional investors were approached in what's known as a "pilot fishing" exercise to ascertain a price Royal Mail. They, of course, were incentivised to quote a low price. Mr Hahn says that's a slightly simplified scenario - but was basically what happened. "IPOs (initial public offerings) are always more of an art than a science," Mr Hahn says on Radio 5 live.

     
  15.  
    06:07: Royal Mail privatisation
    Royal Mail"s Glasgow mail centre at St Rollox

    The government made £180m less from the £2bn sale of Royal Mail than it could have, a report commissioned by Business Secretary Vince Cable has said. It says shares could have been valued up to 30p more than the flotation price of 330p because of the high level of demand from banks and individuals. It said future government share sales should be more transparent and the pricing could be set at a later stage.

     
  16.  
    06:03: Markets boosted by US Fed

    US Federal Reserve chair Janet Yellen had some Christmas cheer for investors and borrowers on Wednesday when she signalled the central bank planned to be "patient" before raising interest rates. Most analysts had expected the Fed to signal its willingness to raise interest rates early next year but Ms Yellen's comments suggest the bank it wiling to wait a little longer. That's given markets a boost so far today.

     
  17.  
    06:02: Ben Morris Business Reporter

    If you want to get in touch you can email bizlivepage@bbc.co.uk or tweet us @bbcbusiness.

     
  18.  
    06:00: Matthew West Business Reporter

    Morning folks. It's going to be another busy morning by the looks of things. Yesterday's reassurance from the US Federal Reserve has cheered markets in Asia and even lifted the Russia rouble. Meanwhile, Royal Mail was "underpriced" by £180m, a report into its stock market flotation has found. There's lots more to come, so stay with us.

     

Features

From BBC Capital

Programmes

  • Digital candlesClick Watch

    Inside the 'Harry Potter' church, using technology to explore "digital empathy".

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.