By Lucia Mutikani
(REUTERS) - Employment growth picked up speed in November and
the jobless rate dropped to a 2-1/2 year low of 8.6 percent, further
evidence the economic recovery was gaining momentum.
Nonfarm payrolls increased 120,000 last month, the Labor Department
said on Friday, in line with economists' expectations for a gain of
122,000.
The relative strength of the report was also bolstered by revisions
to the employment counts for September and October to show 72,000 more
jobs created than previously reported.
While part of the decline in the unemployment rate from 9.0 percent
in October was due to people leaving the labor force, the household
survey from which the jobless rate is derived also showed solid gains in
employment
The unemployment rate had been expected to hold at 9 percent.
"The labor market is gradually healing. It's a glacial pace, but we
are taking small steps in the right direction," said Ryan Sweet, a
senior economist at Moody's Analytics in West Chester, Pennsylvania. He
made the comments before the release of the report.
The report is unlikely to take much pressure off President Barack Obama,
whose economic stewardship will face the judgment of voters next
November. The outlook for the U.S. economy is also being threatened by
Europe's deepening financial crisis.
The report will not prove decisive for the U.S. Federal Reserve, which is weighing whether the recovery needs further monetary support.
Data ranging from manufacturing to retail sales suggest the growth
pace could top 3 percent in the fourth quarter, in contrast to China, where growth is cooling. Growth in much of Europe has slowed down.
While the economy's growth pace appears to have accelerated from the
third quarter's 2 percent annual rate, it is still insufficient to cut
deeply into the high unemployment rate, and Europe's festering debt
crisis poses a big threat.
At the same time, U.S. fiscal policy is set to tighten in the new year, even if lawmakers extend a payroll tax cut.
Taken together, some analysts believe the headwinds facing the U.S.
economy will lead the Fed to ease monetary policy further by buying more
bonds.
"We still have a very long way to go. I would favor the Fed going for
a third round of quantitative easing," Sweet said. "It's the only
powerful tool left, even though it's losing some of its bang."
Analysts say the economy needs to create at least 125,000 jobs every month just to keep the unemployment rate steady.
PRIVATE SECTOR SHOULDERS BURDEN
All the increase in nonfarm payrolls in November again came from the
private sector, where employment rose 140,000 after increasing 117,000
in October.
Government employment fell by 20,000. Public payrolls have dropped in
10 of the past 11 months as state and local governments have tightened
their belts.
Outside of government, job gains were almost across the board, with retail surging 49,800.
Elsewhere, construction payrolls fell 12,000 after losing 15,000 jobs
in October. Factory jobs edged up 2,000, with most of the gains coming
from automakers.
Health care and social assistance hiring rose 18,700 after adding
30,300 job in October. Temporary hiring -- seen as a harbinger for
future hiring - increased 22,300 after adding 15,800 jobs last month.
The average work week was unchanged at 34.3 hours, with hourly earnings falling two cents.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
