The U.S. economy generated a burst of jobs in November, the government reported Friday, pushing the United States’ unemployment rate to a 24-year low and defying predictions that the economy would begin to slow.
The Labor Department’s monthly survey showed American businesses added 404,000 workers to their payrolls over the month, forcing the jobless rate to 4.6 percent, its lowest since October 1973.
The unexpected surge in job growth was almost double what most economists had expected, and left many at a loss to explain why the long-forecast economic slowdown still has not begun. In October, the unemployment rate was 4.7 percent and job growth was 287,000.
Usually when unemployment gets this low, tight labor markets have helped push up inflation. But this time the lowest inflation rate in years shows no sign of getting worse, and analysts predicted that the Federal Reserve will not boost interest rates.
Robert G. Dederick, chief economist for Northern Trust Co. of Chicago, said while there are solid signs that wages are rising, “we still don’t have price pressures” that are likely to send the inflation rate rising.
Financial markets, which had plunged sharply following instances earlier this year in which job levels grew rapidly, appeared to take the new figures relatively calmly.
The Dow Jones industrial average rose by 98.97 points to close at 8,149.13. Bond prices, which are more sensitive to fears of inflation, fell initially, but later recovered after investors reassessed the situation.
Friday’s report showed the surge in new jobs was spread throughout the major sectors of the economy, with especially sharp gains in manufacturing, construction and the retail and service industries.
Analysts said the figures appeared to show no impact yet from the economic slump in Asia, which is expected to heighten import competition and dampen Asians’ appetites for U.S. exports.
But Cynthia Latta, economist for DRI/Standard & Poor’s, a large forecasting company, said the situation in Asia was bound to take a toll soon. The latest spurt in job growth “could be the last fling,” she said.
President Clinton hailed the new job figures as evidence “that our economy is growing, steady and strong, and that the American dream is in fact alive and well.”
He also expressed confidence that the financially troubled Asian economies would quickly recover if they carried out their pledges to overhaul their weakened financial structures.
The Asian economies have “hit a rough patch,” he said, but added that “underlying productivity and potential in Asia is enormous.” He called the reforms announced by Japan and other countries “basically good news.”
Friday’s statistics on the job situation were accompanied by two other government reports:
The Federal Reserve Board reported that consumer credit in the United States rose at a 10.5 percent annual rate in October - its fastest pace since last July - following a rise at an 0.6 percent annual rate the previous month.
The Commerce Department said factory orders rose moderately in October for the fifth month in a row, edging up 0.3 percent following an 0.4 percent gain in September. The rise stemmed mainly from aircraft sales and autos.
As economists have been warning for months, Friday’s report on the job picture showed a sharper-than-usual increase in wage costs.
The average hourly earnings of rank-and-file production workers - a key indicator of wage pressures - rose by 0.6 percent in November, following increases of 0.4 percent in October and 0.3 percent in September.
The length of the average workweek - which reflects the amount of overtime Americans are putting in - rose to 34.8 hours in November, from 34.5 hours in September and October.
The report also showed that the booming economy is continuing to keep unemployment relatively low among Latinos and blacks, groups that traditionally have had jobless rates far higher than the rate for the nation.
The jobless rate for Latinos, for example, plunged to 6.9 percent in November - its second-lowest on record - while that for blacks remained at 9.6 percent, virtually unchanged from October’s level.
The November report marked the eighth consecutive month that the unemployment rate has remained below 5 percent, continuing an extraordinary expansion that now is in its sixth year.
Bruce Steinberg, chief economist at Merrill Lynch & Co., said Friday he still expected the economy to slow sharply, in part because of the economic slump in Asia, with unemployment rising slightly in 1998.