(Bloomberg) -- U.S. hiring picked up in November and the unemployment rate tumbled to a nine-year low while wages unexpectedly declined, providing a mixed picture of progress in the labor market.
The 178,000 gain followed a 142,000 rise in October that was less than previously estimated, a Labor Department report showed Friday. The median forecast in a Bloomberg survey called for a 180,000 advance. The jobless rate fell to 4.6 percent from 4.9 percent as people entered the labor force and found jobs, though the overall participation rate dropped for a second month.
A steady job market signals employers were willing to keep hiring in the days before and after the Nov. 8 presidential election, and the lower jobless rate suggests pay and inflation will continue to trend upward. At the same time, while the Federal Reserve is almost certain to raise borrowing costs this month, sustained weakness in wages or participation would weigh on the economic outlook.
“The labor market is still healthy, and perhaps operating at or beyond capacity,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “Wages can be volatile month to month. I’d tend to put a little more weight on the unemployment rate when thinking about future developments and wage inflation.”
Revisions subtracted a total of 2,000 jobs from payrolls in the previous two months.
November payroll estimates in a Bloomberg survey ranged from gains of 140,000 to 250,000. October was initially reported as a 161,000 increase.
The unemployment rate, which is derived from a separate Labor Department survey of households, was projected to hold at an eight-year low of 4.9 percent, according to the survey median.
Even with the tight labor market, the news on wages was disappointing. Average hourly earnings fell by 0.1 percent from the prior month to $25.89, the first decline since December 2014. They climbed 2.5 percent over the 12 months ended in November, following a 2.8 percent year-over-year gain in October. The average work week for all workers was unchanged at 34.4 hours.
Other measures continue to signal weaknesses that Donald Trump highlighted in the months leading up to his victory in the presidential election.
The participation rate, which shows the share of working-age people in the labor force, decreased to 62.7 percent last month from 62.8 percent. It has been hovering near the lowest level since 1978, with the longer-term slide mainly due to retiring baby boomers. Better employment prospects may draw more people into the workforce or limit unemployed Americans from giving up and dropping out.
Friday’s data showed that 4.52 million Americans who entered the labor force got jobs in November, up 575,000 from October -- the biggest monthly increase in records going back to 1990. The reverse measure, people going from employed to being out of the workforce, rose by 296,000 to 4.68 million, in part reflecting retirees.
In a sign of better job prospects, those classified as unemployed fell by 387,000 to 7.4 million. Nonetheless, the total number of working-age Americans not in the labor force increased by 446,000 to 95.1 million.
“The ongoing aging of the labor force will prevent a rise in participation,” said Michael Gapen, chief U.S. economist at Barclays Plc in New York, who previously worked at the Fed.
The underemployment rate -- which includes part-time workers who’d prefer a full-time position and people who want to work but have given up looking -- fell 0.2 percentage point to 9.3 percent. While that’s the lowest since April 2008, it compares with 8.4 percent in November 2007, the month before the last recession began.
Americans who are working part time though would rather have a full-time position, or the measure known as part-time for economic reasons, fell 220,000 to 5.67 million. That compares with 4.5 million just before the recession.
Companies continue to add jobs at a steady clip. Private employment, which excludes government agencies, rose by 156,000 after a 135,000 increase the prior month.
Government payrolls rose by 22,000, with employment at state and local agencies up 19,000.
The report showed differences across industries. Service providers, which include restaurants, business services and health-care, are typically less exposed to headwinds -- such as tepid overseas markets -- than manufacturers.
Payrolls at factories fell by 4,000, after a 5,000 decline in the previous month. Retailers reduced payrolls by 8,300. Employment in leisure and hospitality rose by 29,000.
Stephen Stanley, chief economist at New York-based Amherst Pierpont Securities LLC, said in a note that he was skeptical retail employment was truly falling because of widespread reports that stores “hired aggressively and earlier than usual this year for the Christmas season.”
“The labor market has gotten tight,” Stanley wrote. Much of the recent wage volatility came among salaried workers, whose hourly pay is tougher to measure, and “I know that wages in the real world are accelerating,” so the data “could be related to weather, seasonality, or purely random noise,” he said.