NEW YORK (TheStreet) -- The jobs numbers are encouraging, and though unemployment remains exceptionally high, the drop in U.S. unemployment to a five-year low in November strengthens the argument that federal stimulus measures have been effective.
Unemployment fell to 7%, a figure unseen since 2008, prior to the start of the mortgage-bursting Great Recession. U.S.-based manufacturers added 27,000 jobs in November. Following a gain of 16,000 jobs in October, the economy produced largest two-month gain for the sector since February-March of 2012, a fact emphasized by Dean Baker of the Center for Economic Policy and Research in Washington.
TD Securities' director of U.S. research and strategy Millan Mulraine sent out a note this morning saying the report "suggests that the U.S. economic recovery is continuing to generate significant positive momentum."
Here's the unemployment picture over the last ten years:
The five-year low in unemployment comes after the Federal Reserve began its unprecedented purchase of $40 billion in mortgage-backed securities (MBS) in Sept. 2012, before increasing that level to $85 billion per month for both U.S. Treasuries and MBS in December 2012. The Federal Reserve's actions came after President Barack Obama's roughly $600 billion of stimulus spending in 2009-10, actions which Republicans denounced as counter-productive, and which Democrats and more progressive-leaning voices argued was insufficient.
Certainly, 7% is terribly high considering the damage such high levels of joblessness have on families and young people seeking to pay of student loans or start business.
As for stocks, markets responded with a surge, endorsing the view that the economy may be rebounding sufficiently to sustain its present growth pace even if the Fed decides in the near future to curb the asset buying that has helped fuel stocks for the past 18 months.
Will the S&P 500 (^GSPC) manage to eke out a ninth week of gains?
Miller Tabak chief economic strategist Andrew Wilkinson says this isn't out of the question given the optimism Friday about an increasingly conducive equities environment consisting of what looks to be a strong labor market recovery combined with prolonged, easy monetary policy even as tapering begins.
"As we've gone to pains to explain, tapering will be miniscule and does not influence the lift-off date for the fed funds rate, which the world and its mother now believes will be 2016 and in our opinion possibly later," he said in a note.
Wilkinson points out that it would now take a rather weak December payroll report to prevent overall 2013 payrolls from eclipsing gains made in 2012. He calculates that payroll creation in the final month of the year must be as low as 118,000 to prevent this year from being better than last. However, if the economy generates the average pace of 192,000, the gain for the year of 2.262 million becomes the best since 2005.
Durable sector employment also rose, adding 10,000 jobs last month, underscored by expansion in the food industry.
--By Leon Lazaroff and Andrea Tse in New York
--Written by Leon Lazaroff in New York.
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