U.S. unemployment rate hits 5-year low, eyes on the Fed

WASHINGTON, (Reuters) – U.S. employers hired more workers than expected in November and the jobless rate hit a five-year low of 7.0 percent, raising chances the Federal Reserve could start ratcheting back its bond-buying stimulus as soon as this month. Nonfarm payrolls increased by 203,000 jobs last month, following a similarly robust rise in October, the Labor Department said yesterday. The report, which showed broad gains in employment and a rise in hourly earnings, suggested strength in the economy heading into year-end.

“It will add further confidence to the Fed of a reduced need for monetary stimulus in the U.S economy.

We now see the bias shifting in favor of a January tapering announcement,” said Millan Mulraine, senior economist at TD Securities in New York.

The unemployment rate dropped three tenths of a percentage point to its lowest level since November 2008 as some federal employees who were counted as jobless in October returned to work after a 16-day partial shutdown of the government.

The decline came even as the participation rate – the share of working-age Americans who either have a job or are looking for one – bounced back from October’s 35-1/2-year low.

A separate report showed improving labor market prospects buoyed consumer confidence in early December.

Contributing to its firm tone, the jobs report showed that the length of the average workweek reached a three-month high and that 8,000 more workers were hired in September and October than previously reported.

In addition, a measure of underemployment that includes people who want a job but who have given up searching and those working part-time because they cannot find full-time jobs fell to a five-year low

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