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US created 211K jobs in Nov; unemployment rate at 5%

The U.S. economy generated a solid 211,000 jobs in November, a number that topped expectations and may have turned the final key for the Federal Reserve to hike interest rates later this month.

In a much-anticipated report, the Bureau of Labor Statistics said nonfarm payroll growth continued to build on the momentum from October. Wall Street has been watching the employment picture closely for clues as to whether the Federal Open Market Committee and Chair Janet Yellen will sign off on the first rate increase in 9½ years.

Fed fund futures were pricing in a 79 percent chance of a rate increase when the FOMC meets Dec. 15-16. The level was little changed from Thursday.

"Yellen did a good job this week of putting the markets on notice that she and the FOMC intend to raise rates here in the middle of December," said Michael Arone, chief investment strategist for State Street Global Advisors' U.S Intermediary Business. "This report only further affirms that view. So it looks like all systems are go for the beginning of policy normalization."

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The unemployment rate remained at 5.0 percent. A more inclusive number that counts discouraged workers and those working part time for economic reasons edged higher from 9.8 percent to 9.9 percent. The labor force participation rate remained mired around lows not seen since the late 1970s, though it did edge higher to 62.5 percent.

A job seeker (left) shakes hands with a recruiter during a WorkSource Seattle-King County Aerospace, Maritime and Manufacturing job fair in Seattle on Oct. 6, 2015.
David Ryder | Bloomberg | Getty Images
A job seeker (left) shakes hands with a recruiter during a WorkSource Seattle-King County Aerospace, Maritime and Manufacturing job fair in Seattle on Oct. 6, 2015.

Wall Street had been expecting 200,000 new jobs and the unemployment rate to be unchanged.

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Demographic jobless rates mostly showed little change, though the level for blacks rose from 9.2 percent to 9.4 percent and the rate for Asians jumped from 3.5 percent to 3.9 percent.

Job creation was skewed to part time, with full-time positions growing just 3,000 while part-time positions were up by 137,000. The divergence was "statistical noise" as part of the typically volatile month-to-month household survey, said Paul Ashworth, chief U.S economist at Capital Economics.

Wages also grew for the month, though at a slower pace than in October. Average hourly earnings climbed 4 cents, equating to a 2.3 percent annualized gain. Because the work week edged lower, average weekly earnings actually pulled back from $872.27 to $871.13.

"That's below the level we'd typically see during a robust expansion, but making progress," Mark Hamrick, senior economic analyst at Bankrate.com, said in a statement. "Other gauges of compensation are looking good or even better (including benefits). This helps explain why holiday sales expectations are muted."

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Previous months also saw substantial revisions, with October's initially reported 271,000 jumping to 298,000 and September's relatively anemic count of 137,000 getting pushed up to 145,000.

Private payrolls increased 197,000, while the government added 14,000 jobs.

Market reaction was jumbled. Stock market futures and government bond yields initially jumped on the positive jobs report but soon retreated, then moved higher.

Construction saw the biggest gains among sectors, adding 46,000, while professional and technical services grew by 28,000 and health care rose 24,000. Mining lost 11,000 positions.

The number of those not counted in the labor force showed a rare contraction, declining 67,000 to 94.45 million.