Unemployment Rate Falls to 10%

By LUCA DI LEO and JEFF BATER U.S. job losses slowed sharply in November and the unemployment rate unexpectedly declined, in a sign the labor market is finally starting to heal as the economy recovers. Nonfarm payrolls fell by just 11,000 last month, slowing down from a downwardly revised 111,000 drop seen in October, as the recovery encouraged companies to retain workers, the Labor Department said Friday. It was the best showing since December 2007, when payrolls rose by 120,000, said a Labor department official. Economists surveyed by Dow Jones Newswires had expected a payroll decrease of 125,000. The unemployment rate, calculated using a survey of households as opposed to companies, edged lower to 10% in November from 10.2%. Economists had forecast the jobless rate would remain at October's level of 10.2%, when it rose to the highest level since April 1983. Employment fell in construction, manufacturing, and information, while temporary help service and health care added jobs.

The boost in service-providing jobs was mainly in professional & business services, up 86,000 with most of that coming from temporary help services, up 52,000. Education & health services and government components also posted increases. However, declines were seen in trade & transportation, leisure & hospitality, and financial activities.

Despite the better-than-expected report, the jobs market has still some way to recover. Since the start of the recession in December 2007, the number of unemployed has increased by almost eight million. The November jobs report should maitain the Federal Reserve's view that interest rates must remain at a record low to bolster a soft recovery. The central bank's rate-setting committee left interest rates close to zero a month ago in the face of low inflation and still-high unemployment. Fed Chairman Ben Bernanke Thursday told U.S. senators the central bank expects the unemployment rate to decline only slowly from next year as the economic recovery remains "moderate." Bernanke last month warned the U.S. may be at risk of a so-called "jobless recovery", in which output is growing but employment doesn't increase. President Barack Obama is concerned about the persistently high jobless rate. His administration Thursday kicked off a jobs summit, with the president promising to take "every responsible step to accelerate job creation." In minutes released after their Nov. 3-4 meeting, Fed officials increased their growth estimates slightly, but projected an economy rebounding so slowly that it barely dents unemployment. They expect the jobless rate to remain between 9.3% and 9.7% by this time next year, and to settle above 8% in 2011, levels usually seen in recessions. The U.S. economy expanded in the third quarter for the first time in more than a year, growing an annual 2.8%, but the jobs market's weakness, tight bank lending and a fading government stimulus is expected to keep the recovery contained. "We expect the jobless rate to start falling very gradually in the first half of 2010", said Antulio Bomfim, a former Fed economist now with forecasting firm Macroeconomic Advisors in Washington. The payroll data reflects a notable improvement in the jobs market. In the prior three months, payroll job losses had averaged 135,000 a month. Employment in the service sector -- the main source of U.S. jobs -- rose by 58,000 in November. But that was more than offset by manufacturing companies shedding 41,000 jobs and construcion companies cutting 27,000. Health care employment continued to rise in November, by 21,000. The industry has added 613,000 jobs since the recession began at the end of 2007. Friday's report showed that average hourly earnings rose by 0.1%, or $0.01, to $18.74. The average workweek rose by 0.2 hour to 33.2 hours in November.