Payrolls in U.S. Decline 11,000; Unemployment at 10%

Dec. 4 — Employers in the U.S. cut the fewest jobs in November since the recession began and the unemployment rate unexpectedly fell, signaling the recovery is lifting the labor market out of the worst slump since World War II.

Payrolls fell by 11,000 workers, less than the most optimistic forecast among economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The jobless rate declined to 10 percent.

Stock futures soared, the dollar strengthened and Treasuries declined as the report indicated companies may start hiring again after the labor market shrank by 7.2 million jobs since the recession began in December 2007. Hours worked, wages and staffing at temporary employment agencies all rose.

“With firms seeing profits improving we’re starting to see a much brighter labor market,” said Stefane Marion, chief economist at National Bank Financial in Montreal, whose forecast for a 30,000 decline was the most accurate. “Confidence has been restored and firms now have started to redeploy their cash.”

Futures on the Standard & Poor’s 500 Index added 1.4 percent to 1,113.80 at 9:14 a.m. in New York. The dollar strengthened to 89.57 yen, from 88.26 yesterday. The yield on the government’s 10-year note increased to 3.47 percent from 3.39 percent late yesterday.

Traders increased bets that the Federal Reserve would tighten monetary policy in the third quarter of next year. Yields on the September federal funds futures contract rose by 9.5 basis points. A basis point is 0.01 percentage point.

Record Low Rates

Federal Reserve Ben S. Bernanke has pledged to maintain record-low interest rates until joblessness subsides, even as a recovery takes hold.

Revisions added 159,000 to payroll figures previously reported for October and September. The October reading was revised to show a 111,000 drop in jobs compared with an initially reported 190,000 decline.

Payrolls were forecast to decline 125,000, according to the median estimate of 82 economists surveyed by Bloomberg News. Estimates ranged from decreases of 30,000 to 180,000.

The jobless rate was projected to hold at 10.2 percent. Forecasts ranged from 9.9 percent to 10.4 percent.

The number of temporary workers increased 52,000 in November, the biggest since October 2004 and the fourth straight rise. Payrolls at temporary-help agencies often turn up before total employment because companies prefer to see a steady increase in demand before taking on permanent staff.

The average work week grew to 33.2 hours in November from 33 hours, the biggest rise since March 2003. Average weekly earnings rose to $622.17.

Software Exporter

Some companies are adding workers. Infosys Technologies Ltd., India’s second-largest software exporter by revenue, plans to add 1,000 employees in the U.S. in the next four to five quarters, said Chief Financial Officer V. Balakrishnan.

Government adjustments subtracted 91,000 jobs from the unadjusted November payroll number, about in line with the historical figure. This indicates the seasonal adjustment issue may not have played much of a role in last month’s data.

Today’s report showed factory payrolls fell 41,000 after decreasing 51,000 in the prior month. The median forecast by economists called for a drop of 45,000. The decline included a drop of 6,300 jobs in auto manufacturing and parts industries.

Sales of cars and light trucks increased for a second consecutive month in November after plunging in the wake of the government’s so-called cash-for-clunkers incentive plan. Vehicles sold at a 10.9 million annual pace last month, up from a 10.5 million rate in October.

Builder Payrolls

Payrolls at builders declined 27,000 after falling 56,000. Financial firms decreased payrolls by 10,000 for a second month.

Service industries, which include banks, insurance companies, restaurants and retailers, added 58,000 workers after adding 2,000. Retail payrolls decreased by 14,500 after a 44,200 drop.

Angela Renee Elliott, a 40-year-old accountant and bookkeeper from Wyoming, Ohio, said she’s sent between 100 and 150 resumes after losing her job in April. This is the first time she’s been unemployed in her 17-year career.

“I’m feeling pretty good and have seven interviews” already completed or planned, Elliott said in an interview, after posting her resume online on Nov. 21. “I believe I’m going to have a full-time. I’m keeping my fingers crossed.”

Even so, “it’s going to get worse before it gets better,” she said of the national job market and economy.

Government payrolls increased by 7,000 after a 46,000 rise in the prior month.

Underemployment Rate

The so-called underemployment rate — which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking — fell to 17.2 percent from 17.5 percent.

Economists surveyed by Bloomberg last month projected the jobless rate will exceed 10 percent through the middle of next year even as the economy expands 2.6 percent in 2010.

The U.S. economy expanded last quarter for the first time in a year, growing at a 2.8 percent pace as government incentives spurred consumers to spend more on homes and automobiles.

Some companies such as Harley-Davidson Inc. are among those continuing to trim staff to wring out additional cost savings and stem losses. The biggest U.S. motorcycle maker yesterday approved a restructuring plan at its largest plant, in York, Pennsylvania, which will result in the loss of about 950 union jobs.

“A restructured York operation will enable the plant to be competitive and sustainable for the future, and the new labor agreement is critical,” Chief Executive Officer Keith Wandell said in a statement. The Milwaukee-based manufacturer is cutting costs after nine straight quarterly losses.

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