Unemployment falls to 10 percent; economy loses only 11,000 jobs

The nation lost only 11,000 jobs in November, the smallest number since the recession began in December 2007.

Unemployment dipped to 10 percent last month, according to the Department of Labor, as job losses in the  construction, manufacturing and information industries were offset by job gains in temporary help services and healthcare. Labor said the 11,000 job losses meant payroll employment was "essentially unchanged" for the month.

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The number of jobs lost was a huge surprise, as some economists had been bracing for a number between 100,000 and 150,000. In October, the nation lost 190,000 jobs, and in the previous three months, payroll job losses had averaged 135,000 a month. Earlier this year, at the height of the economic downturn, monthly job losses were more than three times that rate.

Stocks rose on the news, with the S&P gaining more than 1 percent in morning trading.

White House press secretary Robert Gibbs credited the $787 billion stimulus plan with kick-starting the economic recovery, but also warned there would be "bumps along the way" even as the recession eases. 

"The president is pleased we continue to move in the right direction," Gibbs said.

Republicans issuing statements also acknowledged the report is goods news, but said unemployment remains too high. They also said the stimulus has not done as much to create jobs as promised by Democrats.

The biggest gains reported by Labor were in professional and business services, where employment grew by 86,000 in November. Temporary help services accounted for the majority of the increase, adding 52,000. Temporary workers are often the first to lose jobs and to gain them back in a recession.

Since July, temporary help services employment has risen by 117,000.

The average hourly workweek also rose by 0.2 hours to 33.2 hours. This is significant, as employers will add hours for existing workers before hiring new workers.

Retailers are expecting a 1 percent drop in sales this Christmas season given high unemployment, and Labor reported that there was little change in wholesale and retail trade employment. However, department stores did add 8,000 jobs over the month, the report said.

Economist Heidi Shierholz of the Economic Policy Institute said the number of job losses was a surprise and the increase in the hourly workweek is good news. But she said the economy will have to grow more than it did last month for the unemployment rate to begin falling more significantly.

Both ends of Pennsylvania Avenue have been consumed with bringing down the unemployment rate, which had jumped from 9.8 percent to 10.2 in October. The 10.2 percent rate was the highest in 26 years.

President Barack Obama on Thursday held a jobs summit attended by corporate CEOs and union leaders calling for the government to take action.

Obama left the White House Friday morning to travel to Allentown, Pa. to trumpet the new number and address Americans' economic concerns as he kicks off his Main Street tour.

Democrats in the Senate and House are both preparing jobs bills after criticism that the $787 billion stimulus earlier this year did not do enough to stem job losses. A high unemployment rate could be a disaster for Democrats in the 2010 midterm election if voters lose confidence in the party's ability to handle the economy.

Before Friday's report, many economists were projecting unemployment to remain in double digits into next year.

The White House's own economic team expects the rate to average more than 9 percent in 2010 and more than 8 percent in 2011. It is unclear whether the latest data will change those projections.

Shierholz noted that the number of long-term unemployed people has continued to rise and now stands at 38 percent of those without jobs. Those workers have been jobless for at least six months.

House Majority Leader Steny Hoyer (D-Md.) underlined the peril to his party on Thursday. “If jobs don't get into positive numbers, I think the people are going to continue to be concerned,” he said. “And when they're concerned, they look for somebody new, whether you're a Republican or a Democrat.”

The other problem for Democrats is the record budget deficit, which is exacerbated by high unemployment. Benefits to the jobless have expanded as more have joined the unemployed, and the government is also taking in less tax revenue. That makes it difficult to pass a jobs bill if it adds to the deficit.

Obama on Thursday said lawmakers should be more focused on bringing down unemployment than the deficit. "If we can't grow our economy, then it is going to be that much harder for us to reduce the deficit," he said. "The single most important thing we could do right now for deficit reduction is strong economic growth, which means that people who've got jobs are paying taxes and businesses that are making profits . . . are paying taxes."

Still, Obama also said some efforts to spark job creation would have to be set aside because of their cost. 

Gibbs on Friday said a proposal to use unspent funds from the $700 billion bailout of the financial system is "certainly being looked at." He also hinted the president could offer support for a new jobs bill in a speech he is set to deliver Tuesday on the economy.

But Gibbs said a new jobs bill would be smaller than the earlier stimulus. "Is there gong to be another $787 billion plan? The answer is no," he said.

UPDATED:This story was updated at 9:44 a.m. and 11:03 a.m.