http://online.wsj.com/article/SB10001424052748703989004575652483381208608.html?mod=WSJ_hp_LEFTTopStoriesBy LUCA DILEO And JEFFREY SPARSHOTT
The U.S. economy added fewer jobs than expected in November and the unemployment rate rose, dashing hopes that the recovery is gaining momentum.
The U.S. economy added far fewer jobs than expected in November while the unemployment rate rose to 9.8%, the highest since April, underlining continued weakness in the labor market. Evan Newmark, Dennis Berman, Steve Russolillo, Phil Izzo and Sudeep Reddy discuss.
Nonfarm payrolls rose by 39,000 last month as private-sector employers added only 50,000 jobs, the Labor Department said Friday. The jobless rate, obtained from a separate household survey, unexpectedly rose to 9.8%, the highest level since April.
Economists surveyed by Dow Jones Newswires had forecast payrolls would rise by 144,000 and that the unemployment rate would remain unchanged at 9.6%.
The previous two months were revised upward, with October job gains at 172,000 from a previous estimate of 151,000, but that didn't help an overall negative report. The weaker-than-expected data caused the U.S. dollar to weaken against major currencies. U.S. stocks fell while Treasury prices rose amid the clear sign of weakness in the economy.
A recent pickup in consumer spending and strong manufacturing surveys had offered hope the recovery might be gaining strength. But the weakness in the jobs market in November, 17 months after the recession ended, is a stark reminder that the path to recovery is likely to continue to be slow and painful.
The unemployment rate has now been above 9% since May 2009, or 19 months. That matches the longest stretch at such an elevated level since the Second World War. In the previous deep recession of the early 1980s, the jobless rate crept to 9% in March 1982 and remained above that mark until September 1983.
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The weak report provides some justification to the Federal Reserve's controversial decision to buy $600 billion in U.S. Treasury notes through June in an effort to spur growth. Fed officials have been more pessimistic than private forecasters, projecting the jobless rate could still be around 9% a year from now. Some senior politicians have attacked the central bank since it announced the decision Nov. 3, saying the Fed won't be able to control inflation once economic growth accelerates.
"The details of the report are no less discouraging," said Dan Greenhaus, chief economic strategist at Miller Tabak, a New York trading firm.
The November breakdown showed a big job decline in retail trade, a sector where strength was expected heading into the holiday season. The manufacturing sector, which had been the big creator of jobs at the start of the recovery, shed 13,000 jobs, the fourth decline in a row.
Total government employment, meantime, fell by 11,000, hurt by continued losses in municipal jobs. Local governments have been grappling with tight budgets.
Fed Chairman Ben Bernanke said as recently as Tuesday that job creation is the most important problem the economy faces. The poor outlook, together with low inflation, were the main factors behind the Fed's latest bond-purchase program.
The jobs report suggests the Fed is unlikely to cut the bond purchase program short, said Mike Chang, analyst for Credit Suisse. He and other analysts believe there's a possibility the Fed could expand the program.
Mr. Bernanke recently warned the unemployment rate could rise if the economy continues to grow at its current sluggish pace. The Fed chief is particularly worried by the high number of people who have been without work for a long time.
The report showed 41.9% of unemployed Americans, or 6.3 million people, were out of work for more than six months in November. The longer someone is without a job, the harder it is usually to find work.
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U.S. unemployment since 1948
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President Barack Obama's administration this week warned the expiration of long-term jobless benefits could hit consumer spending in the holiday season, weakening the economy further and ultimately costing more jobs. The law that temporarily extended unemployment benefits to as long as 99 weeks expired this week after U.S. Democrat and Republican senators blocked rival attempts to renew it.
A broader measure of the unemployment rate, which includes people who stopped looking for work and those settling for part-time jobs, remained high at 17% in November, the same as in the previous month.
Meanwhile, the average workweek for all employees was 34.3 hours in November, the same as in October. Employers normally increase the hours for their existing work force before hiring new people.
Average hourly earnings of all employees increased by just 1 cent to $22.75. Higher income helps support consumer spending. Accounting for about 70% of demand in the U.S. economy, household consumption remains weak compared with previous recoveries.
—Jeffrey Sparshott, Deborah Blumberg, Tom Barkley and Alan Zibel contributed to this article.
Topic: U.S. Unemployment rises to 9.8% - longest stretch above 9% since depression (Read 633 times)