November US employment report checks all the boxes and looks to be more than "good enough" for Fed

Non-farm payrolls increased by 211k in November, above expectations for a 200k gain. Revisions to the previous two months added 35k to the tally, with October's print nearing a cool 300k as a result.

Private payrolls rose by 197k, also above consensus, led by eds & meds (+40k), leisure & hospitality (+39k) and retail (+31k). Goods-producing industries had a solid month despite a flat manufacturing print (-1k) as construction (+46k) added the most jobs in nearly two years. Mining continued to shed jobs (-11k). Government payrolls (+14k) were up on both federal (+6k), state (+3k) and local (+5k) levels.

The unemployment rate was unchanged, as strong household employment growth (+244k) was matched by an influx of workers into the labor force (+273k). Strong labor force growth led the participation rate higher (+0.1pp) to 62.5%.

Average hourly earnings rose 0.2% during the month, on par with expectations. The year-over-year measure decelerated from 2.5% to 2.3% in November.

Average weekly hours remained declined by 0.1 to 34.5 from an upwardly revised level.

This morning's highly anticipated report ticked all the boxes as far as a monthly labor market health check is concerned. In terms of payrolls, the report verified that hiring remains robust with broad improvements across most sectors that are not highly externally exposed. In fact, given the upward revisions, the trend pace of hiring appears to be strengthening after a lull in late summer, with the three month moving average rising above 200k once again.

The jobless rate did not improve, but it remains very low. In fact, the tighter labor market appears to be drawing in more people into the labor force, with an average of 293k entrants over the last two months  the fastest two-month gain since February.

The only real flaws in the report, if we can refer to them as such, were the tick-down in hours and a lack of stronger wage pressures. After rising by 0.4% m/m, average hourly earnings rose by just 0.2% this month, leaving the year-over-year gain at a still subdued 2.3%.

"We expect that this may be partly related to a large influx of new entrants into the labor force, with wage pressures likely to materialize more strongly over the coming months", says TD Economics.

The bottom line is that the U.S. labor market continues to make progress at a robust pace with today's report more than "good enough" for the Fed when they meet on December 15-16 to discuss monetary policy.

"We expect that liftoff from the zero lower bound looks more or less a done-deal, with the Fed likely to stress that future hikes will be gradual", added TD Economics.