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November payrolls fell by much less than expected – declining by just 11,000 – and the unemployment rate fell to 10.0%, the U.S. Department of Labor said Friday. But while it's becoming more apparent that the U.S. job market is closer to growth, caution is still the buzzword as the jobless recovery continues.
When growth does return the consensus is that getting back the roughly 7.2 million jobs lost since the recession began in December 2007 won't be an overnight phenomenon.
"I think it's a little bit premature for champagne, but after enduring two years of really bad news, let's enjoy this one," Jay Bryson, an economist with Wells Fargo Securities (NYSE: WFC) told CNNMoney.com. "You've got to walk before you start running. I don't think we're walking yet, but we're starting to get back up on our feet."
Although far from ideal, there has been a string of indications that the job market – which typically lags stock market rallies – is doing just what Bryson said: getting back up on its feet. November's job cuts were far below the average of the previous three months, which was 135,000, and a median estimate of 125,000 by 82 economists polled by Bloomberg News.
The Labor Department made significant, downward revisions to data from the previous two months. Job losses from September were 139,000 instead of 219,000, while 111,000 jobs were lost in October, less than the previously reported 190,000.
The drop in the unemployment rate is only the second time it fell this year, the first was in July when it dipped to 9.4% from 9.5% in the previous month. Of course, the rate rose sharply in the following months to peak at 10.2% in October, a 26-year high.
But there's evidence that November's drop in job cuts may not be a "blip."
Increasing demand at private firms was indicated by a gain of 86,000 jobs in the professional and business services sector – 52,000 of which were temp jobs. That's the biggest jump in more than five years, and does not account for the typical hiring gain at retailers for the holiday season.
The boost in temp jobs is seen as a sign that companies can't meet demand with their existing work force, and is typically followed by permanent hiring. Another sign of growing demand in November was the number of hours worked, which rose to 33.2 from October's 33, the biggest gain since March 2003.
Weekly initial jobless claims for the week ended Nov. 27 fell by 5,000 to 457,000, while the four-week moving average dropped by 14,250 to 462,000. That marked the 13th consecutive week of declines.
The White House called the jobs report "good news," but U.S. President Barack Obama's Chief Economist Christina Romer says the country still needs to be prepared for further adversity.
"We're on the right path, but I think we do need to be aware that these things do move around," Romer said in an interview with Bloomberg Television.
"While the small drop in employment is good news, it is not clear that we are poised to see any major increase payrolls anytime soon," Naroff wrote in a note to investors. Calling the huge October jump in the rate "an aberration," unemployment should still rise, "but the peak in unemployment is not that far off."
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