Two key industries boost November job gains

Job creation in construction and manufacturing show signs of building momentum after lagging in the recovery. Paul Davidson, USA TODAY 10:21 a.m. EST December 7, 2013

(Photo: PAUL J. RICHARDS AFP/Getty Images)

Story Highlights

Employers add 203,000 jobs in November Unemployment falls to 7% from 7.3% Solid showing sparks talk of Federal Reserve stimulus tapering

Significant job gains last month in two economic bellwethers, construction and manufacturing, are raising expectations for continued strong payroll growth and a strengthening recovery next year. Together those industries contributed 44,000 new jobs to the overall economy's better-thanexpected gain of 203,000, the Labor Department said Friday. Meanwhile, the unemployment rate fell to a five-year low of 7% from 7.3% in October. The unemployment rate fell to a five-year low of 7% from 7.3%, the Labor Department said Friday, as federal employees furloughed during October's government shutdown returned to work. . Un employment rose in October because the federal government furloughed about 450,000 workers during the 16-day shutdown. The jobless rate, in turn, was expected to fall in November as those employees were back at work. JOBS: Falling jobless rate, solid job gains show economy's strength

While the total job advances capped four months of 200,000-plus average gains, economists were especially encouraged by a burgeoning rebound in the bedrock goods-producing sectors. Manufacturers added 27,000 jobs last month the most since March 2012 and 66,000 since August after cutting 40,000 the previous five months. Chad Moutray, chief economist of the National Association of Manufacturers, says producers are responding to a pickup in industrial output as Europe climbs out of recession and the effects of federal budget cuts and tax increases fade. Construction companies, meanwhile, added 17,000 jobs last month and 60,000 since June after shedding positions in the spring. As the housing recovery and energy boom spread to more states, contractors can no longer meet demand by simply piling more hours on existing workers, says Ken Simonson, chief economist of Associated General Contractors. MORE: November job gains easily beat economists' forecasts Manufacturing and construction, which each shed more than 2 million jobs in the recession, are projected to have breakout years in 2014, adding 180,000 and 300,000 jobs, respectively, Moutray and Simonson estimate. That could be a boon for the economy because a pickup in both industries ripples through the economy as home building means more furniture sales and production, as well as the need for more services to cater to busier manufacturers. Manufacturing and construction provide the type of middle-wage jobs that have been shrinking in recent decades. Employees in the sector tend to spend what they earn, says economist Michelle Meyer of Bank of America Merrill Lynch. "It's a bit more of a stimulus to the economy," she says. ANALYSIS: Rates are heading higher, but are still pretty low November's solid jobs report is sure to add to speculation about whether the Federal Reserve will begin to taper its economy-boosting program of monthly bond purchases at its Dec. 17-18 meeting. Pat O'Keefe, director of economic research at CohnReznick, believes the Fed will hold off, noting much of the unemployment rate decline since September is a result of Americans dropping out of the labor force rather than job growth. Also, another budget standoff in Congress looms in a few weeks. Still, the economy and labor market are picking up despite nerve-jangling spending showdowns in Washington. Paul Ashworth of Capital Economics says the November report "gives the Fed all the evidence it needs to begin tapering" this month. Businesses added 196,000 jobs last month. Federal, state and local governments added 7,000. Strong gains in transportation and warehousing, health care and manufacturing led the job growth. Job gains for September and October were revised up by a total 8,000. September's were revised to 175,000 from 163,000 and October's to 200,000 from 204,000. The economy has gained more than 2 million jobs so far this year, the most since JanuaryNovember, 2005. Payroll additions in the past four months now average 204,000. Other barometers of the labor market last month were also encouraging. The average workweek rose to 34.5 hours from 34.4 hours. Employers often pile more hours on existing workers before adding new ones. And average hourly earnings rose four cents to $24.15.

Another possible signal of future hiring is that the number of temporary employees increased by 16,000. Companies typically bring on contingent workers before adding to permanent staff. And a broader measure of joblessness called the underemployment rate which includes parttime employees who prefer full-time jobs and those who've given up looking for work, as well as the unemployed fell to 13.2% from 13.8%. Much of that decline was likely due to the return of furloughed federal workers. The economy and labor market have proved resilient lately despite the shutdown and the prospect of another Washington budget battle over the next month. This week, the government revised up its estimate for third-quarter economic growth to an annual rate of 3.6% from 2.8% and measures of recent manufacturing activity and home sales both picked up more than anticipated. In November, education and health services led job gains with 40,000. Professional and business services added 35,000, transportation and warehousing, 30,000 and retailers, 22,000. Manufacturing and construction, both key sources of middle-income jobs that laid off millions of workers in the recession, are showing signs of strength. Manufacturers added 27,000 jobs as the effects of the European recession and federal spending cuts ease. And construction firms added 17,000 jobs amid a continuing housing recovery.
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