A sharp drop in the US unemployment rate has set the stage for the Federal Reserve to accelerate the scaling back of its stimulus programme this month, economists said, giving it greater flexibility to raise interest rates sooner next year if necessary.
The world’s largest economy added 210,000 jobs in November, roughly half the pace that economists expected and well below the previous month.
But significant improvements in the rate of unemployment, which dropped 0.4 percentage points to 4.2 per cent, as well as the number of Americans re-entering the workforce, affirmed expectations that the Fed will proceed in less than two weeks’ time with a more aggressive timeline for withdrawing its support.