Solid U.S. job gains make Fed likely to hike interest rates

The U.S. economy generated another month of solid hiring in November, making it highly likely that the Federal Reserve will raise interest rates from record lows this month.

The Labor Department said Friday that employers added 211,000 jobs, led by big gains in construction and retail. And the government revised up its estimated job growth for September and October by a combined 35,000.

• Canada sheds 35,700 jobs in November, unemployment rate up to 7.1%

The unemployment rate remained at a low 5.0 per cent for a second straight month. More Americans began looking for jobs in November, and most found them.

Employers have now added an average 213,000 jobs a month over the past six months. The robust hiring indicates that consumer spending is powering the economy even as weak growth overseas and low oil prices squeeze U.S. manufacturers and drillers.

Investors didn't react much to the jobs report, which was generally in line with expectations. The yield on the 10-year Treasury note was little changed at 2.31 per cent, and stock index futures were up about 0.5 per cent in pre-market trading, roughly the same as before the report was released.

U.S. Federal Reserve chair Janet Yellen said this week that the economy appeared to be improving enough to justify a rate hike as long as no major shocks undermine confidence before the Fed meets Dec. 15-16. The Fed has kept its key short-term rate at a record low near zero for seven years.

For the Fed, conditions seem nearly ideal for a period of small and only gradual rate increases in coming months: Job growth has been consistently solid, and wages have begun to rise but not so much as to cause concern about future high inflation.