Unemployment rate increases from 9.6 per cent to 9.8 per cent
(Reuters) — Employment in the United States barely grew in November and the jobless rate unexpectedly jumped to a seven-month high, hardening views the Federal Reserve would stick to its $600 billion plan to shore up the fragile recovery.
Nonfarm payrolls rose 39,000, with private hiring gaining only 50,000, the Labor Department said on Friday. However, overall employment for September and October was revised to show 38,000 more jobs gained than previously estimated.
The unemployment rate was bumped up in November to 9.8 per cent partly because discouraged workers rejoined the labor force. However, the survey of households from which the jobless rate is derived also showed a decline in employment.
Economists had expected payrolls to increase 140,000 last month and the unemployment rate to be unchanged at 9.6 per cent.
"This points to not necessarily a turning point in the data, but maybe a reflection of how uneven the economic data is likely to be," said Jeff Kleintop, chief market strategist at LPL Financial in Boston.
U.S. stock index futures turned lower after the report, and the dollar fell against the yen. Gold prices rose above US$1,400 an ounce, while prices on U.S. government securities rose.
A raft of recent data, including retail sales, had raised optimism the economy was accelerating after hitting a soft patch in the summer.
Discouraged workers more optimistic
"I would have expected the unemployment rate to tick up ... just because Americans who had been discouraged are now back in the workforce because they're more optimistic about finding a job," said Bernard Baumohl, managing director and chief global economist, The Economic Outlook Group, Princeton, New Jersey.
Concerns about joblessness and low inflation led to the U.S. central bank's decision last month to launch its now much-criticized second round of quantitative easing, known as QE2 in financial markets.
The purchases are designed to push already low interest rates down further to stimulate demand.
Fed officials are not the only ones worried about unemployment. The health of the labor market could determine whether President Barack Obama gets a second term in office in 2012.
Disgruntlement over jobs cost the Democratic Party control of the House of Representatives in last month's midterm elections, setting the stage for a battle over economic policy with Republicans.
Employment in November was weak across the board, with government payrolls contracting as local authorities continue to struggle with budget problems.
Employment in the goods-producing sector fell 15,000, weighed down by manufacturing payrolls which fell 13,000 and construction shedding 5,000 jobs.
Employment in the private service-providing sector rose 65,000 in November, though retail hiring fell a surprising 28,100 despite expectations of a busy holiday season.
The workweek was steady at 34.3 hours in November and average hourly earnings edged up 1 cent.
