WASHINGTON — The U.S. job
market is benefiting from an unlikely source: Other countries.
The global economy is showing renewed strength, with Europe, Japan
and many developing nations growing in tandem for the first time in
a decade. The brightening international picture is encouraging more
hiring in the United States — even among manufacturers, which have
been hurt in the past by global competition.
"We're seeing demand coming from where we haven't seen it in a long,
long time," said Scott Anderson, chief economist at Bank of the
West. "We're riding the wave of that added global growth."
In November, U.S. employers added a substantial 228,000 jobs, the
Labor Department said Friday. It was the 86th straight month of
gains, the longest on record, and a sign of the job market's
enduring strength in the economy's ninth year of expansion. The
unemployment rate held at 4.1 percent, a 17-year low.
Friday's jobs report coincided with other signs that the U.S.
economy remains on firm footing. In the past six months, economic
growth has exceeded an annual rate of 3 percent, the first time
that's happened since 2014. Consumer confidence has reached its
highest level since 2000.
Europe's economy is poised to grow at the fastest pace in a decade,
and its unemployment rate has reached its lowest level in nearly
nine years. Japan's economy expanded in the fall for the seventh
straight quarter, its longest period of growth since 2001. Such
developing economies as China and India are growing steadily.
The overall global economy is expanding at its fastest pace in seven
years, according to the Organization for Economic Co-Operation and
Development, a Paris-based think tank. It should fare slightly
better in 2018, the OECD says.
Stronger economies overseas have helped boost profits at U.S.
multinational corporations, a key reason why the Standard & Poor's
500 stock index has climbed 18 percent this year. U.S. companies in
the S&P index derive about half their revenue from abroad.
Exports contributed 0.43 percentage point to economic growth in the
July-September quarter, the most in nearly four years. Factories are
making more goods for overseas markets, including agricultural and
mining equipment. Exports of aircraft engines are up 13 percent,
overseas shipments of semiconductors up 8 percent.
Manufacturers have stepped up hiring. In November, they added 31,000
jobs. Over the past year, they've added 189,000.
"More than anything, a marked improvement in the global economy is
what is driving a better US manufacturing picture," said Cliff
Waldman, chief economist at MAPI Foundation, a manufacturing
Still, solid hiring and a low unemployment rate have yet to
accelerate wages, which rose 2.5 percent in November compared with a
year earlier. The last time unemployment was this low, average wages
were growing at a 4 percent annual rate.
The November jobs data make it a near-certainty that the Federal
Reserve will raise short-term interest rates for the third time this
year when it meets next week, economists said.
Hiring last month went well beyond manufacturing. Construction firms
added 24,000 jobs. Retailers added nearly 19,000 positions, a sign
that physical stores are hiring for the holiday shopping season even
in the face of brutal competition from e-commerce companies.
Transportation and warehousing companies, which are benefiting from
the e-commerce boom, added 10,500.
Hiring has slowed slightly since last year, which is typical when
unemployment falls to low levels. Employers have added an average of
174,000 a month this year, a bit below last year's monthly average
There are also welcome signs that the recovery is finally benefiting
workers who were enjoying little benefit in earlier stages of the
economic rebound, said Jed Kolko, chief economist at job listing
Workers with just a high school diploma are much more likely to have
jobs than they were a year ago. And employees in some of the
lower-paying industries are receiving the biggest pay gains: Average
hourly pay has risen a healthy 3.8 percent for workers in a category
that includes hotel and restaurant employees.
"In a tight labor market, employers may look to a wider set of
candidates than they would when unemployment was higher," Kolko
Brian Ernest, who owns a small home renovation and contracting firm
in Edgewater, Maryland, just hired a project manager to help him
keep up with his fast-growing business. He advertises through the
Thumbtack website and relies on word of mouth among Realtors.
When he has advertised jobs this year, he hasn't found many takers,
given the low unemployment rate. Rather than raise base pay, he
started providing profit-sharing.
"I offered what everybody is really looking for: Incentives to
increase their salaries," he said. Some government measures of
income growth don't always capture bonuses.
Rising confidence among consumers is translating into major
purchases. Auto sales rose at a solid pace last month.
In October, newly built homes sold at their fastest pace in a
decade, and existing homes sold at their quickest rate since June.
Though wages have yet to pick up, Ian Shepherdson, chief economist
at Pantheon Macroeconomics, said he thinks a continued decline in
unemployment will lead to higher pay. U.S. metro areas with
unemployment rates of 3.5 percent or lower are reporting annual wage
growth of roughly 4 percent, Shepherdson said in an email.