String of good news ends: U.S. jobless rate up

In a jolting surprise to the economic recovery, the U.S. economy added just 39,000 jobs in November, and the unemployment rate rose to 9.8 percent, according to the Department of Labor.

November's number was nowhere near enough to help the large ranks of the unemployed, and was far below analysts' consensus forecast of close to 150,000 jobs and an unchanged jobless rate of 9.6 percent. (The most recent figure for Washington state was 9.1 percent for October.) More than 15 million people across the nation remain out of work, and 6.3 million of them have been unemployed for six months or longer. The monthly snapshot of the job market could lend more support to the Obama administration's call for an extension of unemployment benefits.

The apparent loss of hiring momentum may also fuel the debate over whether the government should take aggressive steps to reduce the deficit in the near term or wait until the economy returns to better health.

Included in the latest report were revisions from previous months. The number of people unemployed because they were laid off or because a temporary assignment ended increased by 390,000, while the number of people re-entering the labor force — after a period of not looking for work — was actually down by 61,000.

Private companies added 50,000 jobs in November. Most of those increases came from the temporary help and health-care sectors. Manufacturing companies, which had showed some strength earlier in the year, lost 13,000 jobs.

Temporary workers accounted for 40,000 of the net increase in private-sector jobs. Staffing firms said companies were continuing to use contract workers to fill gaps.

Employers are "still in the position of saying, 'Hey, we need help, but only when we absolutely have to do we commit to permanent hiring,' " said Tig Gilliam, CEO of Adecco North America, a temporary-staffing company. "That uncertainty takes time to overcome."

The anemic growth in jobs came as economists had been gradually showing more optimism. Weekly initial unemployment claims have recently been trending lower, pending home sales in October topped forecasts and November retail sales jumped by one of their highest increases in years.

"Obviously this is a disappointing report, to say the least," said James O'Sullivan, chief economist at MF Global. But he did not believe the recovery was actually derailed. "Certainly the weight of evidence is that the economy is improving, and labor data can be unreliable."

Advocates for the unemployed were shocked by the jobs data.

"I'm still trying to get my jaw off the floor," said Andrew Stettner, of the National Employment Law Project. "What it does is it kills the story that maybe I thought we could start telling, which was steady improvement. If we had four months in a row of improving jobs numbers, we would still need a lot of work to get back to full employment, but now it's not even moving in the right direction."

"It will be a long haul back to normalcy," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Vice President Joseph Biden called the unemployment figures disappointing and pressed lawmakers to extend long-term unemployment benefits, which expired this week, before Congress adjourns for the year.

Programs that provide up to 99 weeks of extra aid to nearly 2 million unemployed people expired at the end of November because Congress failed to extend them. Some are starting to lose their benefits as the holidays arrive.

Material from The Associated Press is used in this report.