The US unemployment rate tumbled to a 2-1/2 year low in November, even though the pace of hiring remained too slow to suggest a significant acceleration in the labour market recovery.
In a report by Reuters, nonfarm payrolls increased by 120,000 jobs, the Labour Department said and the jobless rate dropped to 8.6 per cent, the lowest since March 2009, from 9 per cent in October.
It was the biggest monthly decline since January. While part of the decrease was due to people leaving the labour 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 a survey of employers was relatively modest and most of the hiring was concentrated in the retail sector, the rise in employment topped October’s upwardly revised 100,000 increase.
In all, 72,000 more jobs were created in October and September than previously reported.
The report could temper the appetite among some Federal Reserve officials to ease monetary policy further, although its unlikely to be much help to president Barack Obama in his bid for a second term.
In forecasts released earlier this month, the U.S. central bank said the jobless rate would likely average 9 per cent to 9.1 per cent in the fourth quarter. It did not expect it to drop to an 8.5 per cent to 8.7 per cent range until late next year.
“The drop in the unemployment rate may make them impatient to pull out the big guns, but there is still not enough evidence of sustained, above-trend growth to get them to stop worrying about downside risks,” said Michael Feroli, an economist at JPMorgan in New York.
Data ranging from manufacturing to retail sales suggest the U.S. economy’s growth pace could top 3 per cent in the fourth quarter, a sharp step up from the second quarter’s 2 percent annual rate.