Jobless rate unexpectedly falls to 10 percent

A surprising drop in the November unemployment rate and in job losses cheered investors Friday and raised hopes for a sustained economic recovery.

The rate unexpectedly fell to 10 percent last month, from 10.2 percent in October, as employers cut the fewest number of jobs since the recession began. The better-than-expected figures provided a rare dose of good news for a labor market that’s lost 7.2 million jobs in two years.

The average work week also rose, along with average earnings. And the Labor Department said 159,000 fewer jobs were lost in September and October than first reported.

The stock market jumped and Treasurys fell in response to the reports. In midmorning trading, the Dow Jones industrial average surged 110.94, or 1.1 percent. Broader stock averages also rose.

Still, the respite may be temporary. Job creation is expected to remain far too weak in coming months to absorb the 15.4 million unemployed people who are seeking work — and 11.5 million others who are either working part-time but want full-time jobs or have given up job hunting. As more people begin seeking work, the jobless rate is likely to resume rising.

The report offered further evidence of how hard it remains to find employment: The number of people jobless for at least six months rose last month to 5.9 million, and the average length of unemployment rose to more than 28 weeks.

"We will need very substantial job growth to get unemployment lower, especially when the labor force … starts growing again," said Lawrence Mishel, president of the Economic Policy Institute, a liberal think tank.

The economy shed 11,000 jobs last month, an improvement from October’s revised total of 111,000, the Labor Department said Friday. That’s much better than the 130,000 Wall Street economists had expected.

If part-time workers who want full time jobs and laid off workers who have given up looking for work are included, the so-called underemployment rate also fell, to 17.2 percent from 17.5 percent in October.

The average work week rose to 33.2 hours, from a record low of 33 hours. Economists expect employers will increase hours for their current workers before hiring new ones.

"We’ve still got a long way to go, but the good news in this report provides important positive momentum," said Carl Riccadonna, senior U.S. economist at Deutsche Bank.

The increase in hours worked also means employees are earning more income, Riccadonna said, which could help boost consumer spending and enable Americans to pay down more debt.

Average weekly earnings jumped $4.08 to $622.17, the report said.

Temporary help services added 52,000 jobs, the fourth straight increase. That’s also positive news, as companies are likely to hire temporary workers before adding permanent ones. Total employment usually starts to increase between three and six months after temporary employment, Riccadonna said.

The economy has now lost jobs for 23 straight months. But the small decline in November indicates the nation could begin generating jobs soon. Many economists think it will happen in the first quarter of next year.