The latest report from the Labor Department shows unemployment at 4.6%, the lowest point since August 2007, but credit union economists aren't quite ready to pop the champagne corks just yet.
"November was a bit of a mixed bag as far as jobs were concerned," National Association of Federal Credit Unions Chief Economist Curt Long said in a statement. "While the headline figure for job growth is a positive, both labor force participation and wage growth declined. Still, the report provided no impediments for a rate hike from the Fed later this month and a quarter-point increase is now a certainty."
Similarly, Brian Turner, chief economist at Meridian Economics, noted that while non-farm payrolls were up by 178,000 last month, long-term unemployment is still at 1.9 million, or one-quarter of all unemployed workers. And the overall ratio of the labor force-to-population remains unchanged, standing at 62.7%, while the employed-to-population ratio stayed stable at 59.7%.
"While others might celebrate the drop in the unemployment rate to new recent lows, the fact that it came by a nearly half-million elimination in the labor force count with no change in either the participation or employment ratios is very problematic," said Turner. "Moreover, the 160,000 increase in November employment is roughly a third of the number of people removed from the labor force. It also trails the 219,000 increase in the increase of the working population. The data also shows the number of people working part-time for 'non-economic reasons' increased by 327,000, suggesting much of the increase could be associated with either seasonal hiring or continued conversion by corporations from full-time to part-time staffing."
In spite of that, Turner agreed that a rate increase of at least 25 basis points is a near certainty when the Fed meets later this month. Not only because of the strong jobs numbers, noted Turner, but as a result of upward trends in inflation, strong Q3 economic growth estimates and a 2.8% increase in annualized wages during October, the biggest annual increase in more than seven years.
