WASHINGTON (Reuters) — Employment in the United States grew faster than expected in November, but a drop in the unemployment rate to nearly a four-year low as people gave up the search for work suggested the labour market was still tepid.
Non-farm employment increased by 146,000 jobs last month, the U.S. Labor Department said, defying expectations of a sharp pull back related to superstorm Sandy.
However, job gains for both September and October were revised to show 49,000 fewer jobs created in those months than earlier reported.
The jobless rate fell to 7.7 per cent last month, the lowest since December 2008. But the drop was because people gave up the search for work, which does not bode well for the economy.
The government said the storm which slammed the densely populated East Coast had not had a substantive effect on employment last month.
"Our analysis leads us to conclude that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November," said John Galvin, acting commissioner at the Bureau of Labor Statistics.
Economists polled by Reuters had expected payrolls to increase 93,000 and the unemployment rate to hold steady at 7.9 per cent.
Employment continues to be held back by fear the government may fail to prevent the US$600 billion in automatic tax hikes and government spending cuts set to take hold at the start of next year. The debt crisis in Europe has also weighed.
"Once Washington policy-makers resolve the near-term fiscal and other policy challenges that have undermined business confidence, we expect the pace of recovery, and job growth to begin to accelerate next year," said Lewis Alexander, chief economist at Nomura Securities in New York.
All of the meager jobs gains in November were in the private sector, with government employment slipping 1,000.
Within the vast private services sector, retail employment gained 52,600, professional and businesses services increased 43,000. Temporary help hiring increased 18,000.
In the goods-producing sector, manufacturing employment fell 7,000. Construction payrolls surprisingly dropped 20,000, despite a surge on homebuilding.
Average hourly earnings increased four cents. The length of the average workweek held steady at 34.4 hours in November.
"Much greater strength in hiring is required over a longer period to deliver stabilization in wage growth," said Julia Coronado, chief North America economist at BNP Paribas in New York.
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