NEWS AND COMMENTARY
December 8, 2000 
US Jobs Growth Slows
By Peronet Despeignes, The Financial Times
Market Optimism Unfounded ... Weiss comments
WASHINGTON - Job growth in the US was weak in November and slower than initially reported in October, but private-sector job growth was steady, so overall unemployment remained near 30-year lows the Department of Labor reported on Friday.
It also said that strong wage growth persisted in the period.
The job payrolls outside the agricultural sector increased by 94,000 in November, and job growth in October was revised sharply downward to 77,000 from 137,000. This compares with 195,000 in September and the average monthly job gains of 200,000 or more over the past three years.
In November, job losses in construction were more than offset by gains in retail and non-retail service industries and by a small increase in factory employment.
The Department's keenly awaited employment report showed the jobless rate edged up slightly to 4% in November from 3.9% in October, compared with 3.9% in September.
The US jobless rate has ranged between 3.9 and 4.1% since October 1999.
Growth in average hourly earnings continued and actually picked up to a 0.4% increase in November from a 0.3% rise in October.
Federal Reserve policymakers are expected to take the latest job data, which appeared to signal slowing job growth, into consideration when they meet for their next interest rate-setting meeting on December 19. The Federal Reserve has previously warned that the labor market remains tight and could bolster labor costs per unit and, consequently, inflation.
The noose got a little looser around the labor market's neck, but that doesn't mean that it has stopped strangling the economy. Inflation is still a real concern for the Fed. Wages rose last month, to the surprise of most economists. That means wage pressures on inflation are still growing.
Still, the market is peering through rose-colored glasses at the latest economic news. Sure, the unemployment rate edged up to 4%, but it remains near 30-year lows. In Nov. 1998, the last month that the Fed cut interest rates, the unemployment rate stood at 4.4%. There is still quite a ways to go before the unemployment rate reaches that level.
Until then, the Fed will likely be quite wary of stimulating the economy with a rate cut -- rising wages and a tight labor market in a rate-cutting environment would fuel inflation to dangerous levels. The Fed is not likely to take that risk.
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