Jobs report contradicts optimistic recent data

WASHINGTON — In a surprisingly weak report that conflicts with a host of other more upbeat recent economic data, the Labor Department reported Friday that the unemployment rate jumped to 9.8 percent in November as employers added only 39,000 jobs during the month.

Viewed in isolation, the report might dash holiday cheer and raise new doubts about the strength of the economy's recovery from the worst downturn in 70 years. However, many analysts were skeptical that the Bureau of Labor Statistics survey was accurate in light of a stream of recent reports showing vitality reviving in retail and auto sales, consumer confidence, manufacturing and even private surveys of job creation.

"This is a very disappointing report. I had expected the report would signal that the recovery was ready to take off. Instead it signals the recovery remains stuck on the tarmac," said Mark Zandi, chief economist for forecaster Moody's Analytics in West Chester, Pa. "I'm a bit suspicious of it, however, given that it is inconsistent with the statistics that have been coming in during the past couple months."

The BLS said the jobless rate jumped to 9.8 percent after three straight months at 9.6 percent partly because people who'd stopped looking for work resumed doing so.

Mainstream forecasters had expected hiring in November to be well north of 150,000, largely because other measures of employment were positive this week.

On Thursday, the four-week average for first-time jobless claims fell to 431,000, the lowest it had been since September 2008.

The ADP National Employment Report, which measures payroll data, showed Wednesday that 93,000 new private-sector jobs were created in November, 54,000 of them in small businesses, which national surveys often overlook.

The National Federation of Independent Business, which represents small employers, released its monthly survey of members Friday, confirming that positive trend. For the first time in 30 months, its members reported an increase in hiring, albeit only one-tenth of a percentage point.

"Bottom line, job creation was positive. Retail sales and income growth in October and November were strong, promising an even better fourth quarter economy. Bottom line, this means more customers and a reason to hire or rehire workers," Bill Dunkelberg, the group's chief economist, wrote in a note.

Friday's poor numbers were even more striking when measured against a BLS revision that showed employers had added 172,000 jobs in October, not the 151,000 first reported last month. September and October reports were revised upward by a combined 38,000 new jobs.

Earlier this week, a Federal Reserve survey of regional U.S. economies concluded that "the economy continued to improve, on balance," from early October to mid-November.

Investors shrugged off the November jobs report. The Dow Jones industrial average added more than 350 points earlier in the week.

Still, there was little to cheer in the jobs report.

"We cannot sugarcoat the fact that this is a disappointing employment report. It is still consistent with continued economic recovery and it is out of line with other employment indicators, but there is no sign of the acceleration in growth that we have seen in other reports thus far in the quarter," forecaster RDQ Economics said in a note to investors.

Other analysts were more sanguine.

"We continue to anticipate gradual improvement in the pace of job growth, with the unemployment rate beginning a sustained, if gradual, downtrend by the end of the first quarter of 2011," Alan Levenson, chief economist for the fixed-income division of investment firm T. Rowe Price, said in a note to investors.