Wall Street ‘Shocked’ At Unemployment Rate Drop And 203K Jobs

The unemployment rate has fallen to the lowest level since 2008 and lower than economist expected, but critics are already pointed to conflicting data.

“Wall Street is shocked by this jobs report. Historically, the fourth quarter has been a weak period for hiring, with the lone exception occurring in seasonal retail positions,” said Todd Schoenberger, managing partner at LandColt Capital. “Even the whisper on the revision was ridiculously off.  The word of the day will be tapering, as the recent GDP report and today’s jobs metric is the most credible evidence to support a change to monetary policy.”

Thursday the Commerce Department reports the U.S. economy grew at an annual pace of 3.6 percent in the third quarter, which was the fastest rate of growth since the first quarter of 2012 and higher than a previous reading of 2.8 percent. Economists were expecting growth to come in at 3 percent.

The U.S. economy added 203,000 jobs in November, topping expectations and fueling speculation that the Federal Reserve could begin dialing back its easy-money policies later this month.

The labor force participation rate, which gauges the proportion of the population employed or seeking employment, rose to 63 percent from 62.8 percent in October, which was the lowest on record since the 1970s.

The headline unemployment rate fell unexpectedly to 7.0 percent, down from 7.3 percent a month earlier, according to data released by the U.S. Department of Labor. Economists had forecast 180,000 new jobs and a November unemployment rate of 7.2 percent.

The report has many on Wall Street looking ahead to the possibility that the Fed will begin to taper it’s bond-buying program, know as quantitative easing.

“A strong jobs report could be the clincher for the Fed starting to taper in December,” said Greg McBride, senior financial analyst at Bankrate.com, ahead of the report’s release.

“This week’s data therefore add to the sense that the Fed will be itching to pull the trigger to take the first shot at killing off its huge $85 billion per month asset purchase program at its December meeting, at least to fire a warning shot that the time has come to start slowly bringing about some normalization of policy. However, the most likely outcome still looks like a deferment of any decisions until the new year,” said Chris Williams, chief economist at research firm Markit.

The labor participation rate, a closely watched gauge of the percentage of working-age Americans currently employed, ticked slightly higher to 63 percent from 62.8 percent, a positive sign although the rate remains at its lowest level in three decades.

Sectors that saw particularly strong growth last month included manufacturing, construction, transportation and warehousing, according to the Labor Department’s figures.

Job growth at U.S. factories nearly doubled month-over-month, climbing to 27,000 in November, up from 16,000 a month earlier. The construction sector added 17,000 jobs. Employment in transportation and warehousing jumped by 31,000 in November, led by gains in couriers and messengers, truck transportation, warehousing and storage, and air transportation.

Average hourly earnings rose by 0.2 percent to $24.15 in November from the previous month, and climbed 2 percent from a year ago.