Job market signals solid growth

NEW YORK (CNNMoney.com) -- Job growth showed surprising strength in November, according to a government report that also showed the unemployment rate edging higher from a five-year low.

Employers added 132,000 jobs to payrolls in November, according to the Labor Department, up from a revised gain of 79,000 in October. Economists surveyed by Briefing.com had forecast a gain of 105,000 jobs.

But the unemployment rate rose to 4.5 percent from 4.4 in October, in line with forecasts, as unemployed people who had stopped looking for work streamed back into the labor force.

Analysts said the report pointed to sustained economic growth, despite other recent signs of weakness in manufacturing, home building and some other parts of the economy.

The revision in the September and October payroll numbers resulted in a net gain of 42,000 for those months, as September was revised higher and October edged lower.

The report also showed a more modest-than-expected 0.2 percent rise in average hourly wages, down from the 0.4 percent rise in October. Economists had forecast a 0.3 percent rise.

The increase to an average hourly wage of $16.94 an hour left wages up 4.1 percent from a year earlier.

"In a sense, the robust employment growth sends a reassuring message that the economy is growing nicely without experiencing the negative side effects of runaway wage pressures," said Anthony Chan, chief economist for JPMorgan Private Client Services.

But stocks struggled on Wall Street as optimism about the jobs report was balanced by the dollar turning lower against the euro and yen, and a jump in oil prices.

Rich Yamarone, director of economic research at Argus Research, said the job report showed strength but wasn't enough to change the thinking of the Federal Reserve about whether the economy was getting too hot and needed another interest rate increase to keep prices in check, or was slowing too much and needed rate cuts instead.

"It's really difficult to get spooked over 132,000 new jobs," he said. "It's not enough to change monetary policy or scare the financial markets."

John Silvia, chief economist for Wachovia, said the report shows very uneven economic growth, with weakness in manufacturing and construction keeping overall growth - and wages - in check. "I think the distribution of jobs is really the story," he said. "I think you've got some real fundamental issue that has to be dealt with."

Factory jobs fell by 15,000 while builders cut 29,000 jobs. Most of the nations' home builders have been reporting sharply lower sales and earnings, with the latest weak report coming from luxury builder Toll Brothers (Charts). Top home builders such as Pulte Home (Charts), Centex (Charts), and D.R. Horton (Charts) have seen declining sales as contractors and subcontractors in the sector trimmed 15,500 jobs in the month.

Among manufacturers, the automakers and auto parts companies have been particularly hard hit, with that sector seeing nearly a 7,000 job reduction. And more declines there are likely. Ford Motor (Charts) announced last month that about 38,000 U.S. employees, or more than half of its hourly work force here, had accepted offers to leave the company in the coming months. General Motors (Charts) announced earlier this year 34,413 hourly workers accepted offers to leave.

But the retail sector saw its largest jump in 12 months, gaining more than 20,000 jobs on a seasonally-adjusted basis.

Two other sectors - professional and business services and health care - both added more than 40,000 jobs in the month.

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