WASHINGTON ― The unemployment rate fell to a 2-1/2 year low in November, even though the pace of hiring remained too slow to suggest a significant quickening of the recovery.
Nonfarm payrolls increased by 120,000 jobs last month, the Labor Department said on Friday, and the jobless rate dropped to 8.6 percent, the lowest since March 2009, from 9.0 percent in October.
It was the biggest monthly decline since January. While part of the decrease was due to people leaving the labor force, the household survey from which the department calculates the unemployment rate also showed solid gains in employment.
“The economy is continuing to head in the right direction,” said Millan Mulraine, senior macro strategist at TD Securities in New York. “However, the ultimate test of the sustainability of the recovery is for the economy to create a sufficient number of jobs to sustain a consumer-led rebound in activity.”
“On this measure, this report falls short,” he said.Although the gain in the number of jobs created as measured by the survey of employers was relatively modest, it marked a pickup from October’s upwardly revised 100,000 increase.
In all, 72,000 more jobs were created in October and September than previously reported.
The retail sector accounted for more than a third all new private sector jobs in November as shops geared up for a busy holiday season, but average earnings fell two cents.
Data ranging from manufacturing to retail sales suggest the U.S. economy’s growth pace could top 3 percent in the fourth quarter, an acceleration from the third quarter. In contrast, much of the rest of the world is slowing and the euro zone appears to have already fallen into recession.
Stocks on Wall Street opened higher on both the employment report and growing optimism of a solution to the European debt crisis, while prices for U.S. government debt fell. The dollar was little changed against a basket of currencies.
The report could temper the appetite among some Federal Reserve officials to ease monetary policy further.
In forecasts released earlier this month, the Fed said the jobless rate would likely average 9 percent to 9.1 percent in the fourth quarter. It did not expect it to drop to an 8.5 percent to 8.7 percent range until late next year.
However, it is unlikely to take much pressure off President Barack Obama, whose economic stewardship will face the judgment of voters next November.