BUSINESS
12/03/2010 08:41 am ET | Updated May 25, 2011

Unemployment Rate RISES On Weak Job Creation

WASHINGTON (By Lucia Mutikani): U.S. employment increased far less than expected in November and the jobless rate jumped to a seven-month high of 9.8 percent, dampening hopes for a self-sustaining economic recovery.

Nonfarm payrolls rose 39,000, with private hiring gaining only 50,000, the Labor Department said. However, overall employment for September and October was revised to show 38,000 more jobs than previously estimated.

Economists had expected payrolls to increase 140,000 last month and the unemployment rate to be unchanged at 9.6 percent.

A raft of recent data, including retail sales, had raised optimism the economy was accelerating after hitting a soft patch in the summer.

The unemployment rate bumped up in November as some discouraged workers probably rejoined the labor force. The separate household survey also showed a decline in employment.

The weak employment rate will embolden the Federal Reserve to fully implement its controversial $600 billion program to buy long-term government debt. The purchases are designed to push already low interest rates down further to stimulate demand.

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.

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.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)

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