U.S. employers cut far fewer jobs than expected last month in the best showing for the labor market since the recession began, boosting the U.S. dollar and global stock prices on hopes for a strong economic recovery.
The economy shed only 11,000 jobs in November, well below the 130,000 loss financial markets had braced for, while the unemployment rate unexpectedly dropped to 10 percent from October's 10.2 percent, a government report on Friday showed.
The labor market improvement was broad based and 159,000 fewer jobs were lost in September and October than previously thought, according to the Labor Department data.
These numbers are almost too good to be true, said Tom Sowanick, chief investment officer at the OmniVest Group in Princeton, New Jersey.
U.S. stocks opened higher, with the main indexes rising more than 1 percent in morning trade. Global stocks erased losses. Prices for U.S. Treasury debt fell and the U.S. dollar firmed as traders speculated the data could lead the Federal Reserve to raise interest rates sooner than had been thought.
We're almost back to normal, said Chris Rupkey, chief financial economist at Bank of Tokyo/Mistubishi UFJ in New York. The economy is lifting at a much greater rate than expected.
Analysts had expected the unemployment rate to hold steady at a 26-1/2 year high of 10.2 percent.
HELP FOR OBAMA
Soaring unemployment had become a political headache for President Barack Obama and his fellow Democrats, who are worried they will loose seats in Congress next November without a faster recovery.
On Thursday, Obama had appealed to the corporate sector to join in the administration's employment-creation efforts.
While the economy has resumed growth after four straight quarters of decline, economists have been concerned labor market weakness would prevent the recovery from becoming self-sustaining.
The report was much, much better than expected. The data point to a transition in the economy from a deep recession to a modest recovery, said William Sullivan, chief economist at JVB Financial Group in Boca Raton, Florida.
This will encourage the Fed to be more vocal about an exit strategy from their highly accommodative posture, he said.
The Fed cut benchmark interest rates close to zero last December and has pumped more than $1 trillion into the economy to try to spur recovery from the worst recession in 70 years.
Since December 2007, when the recession began, 7.2 million jobs have been lost, the Labor Department said. But the pace of layoffs has slowed sharply from early this year.
The report suggested the bruised job market may be close to turning the corner, with jobs growth likely early next year, although some analysts remained skeptical.
The economy has shed jobs for 23 straight months and the November data was the strongest since December 2007, when nonfarm payrolls increased by 120,000.
Four sectors, including the government, added jobs last month. Manufacturing payrolls fell by 41,000 after dropping 51,000 in October.
The construction sector shed 27,000 jobs, a sharp easing from the average 63,000 decline seen in the prior six months, while the service-providing sector added 58,000 workers, up from an addition of 2,000 jobs in October.
Professional and business services added 86,000 jobs, while education and health services increased payrolls by 40,000. Temporary help employment rose by 52,400, building on other recent gains.
The average workweek, which closely correlates with overall output and gives clues as to when firms will start hiring, rose to 33.2 hours from 33 hours in October. That was the highest since February.
Rising temporary hiring and the gain in the average workweek suggest companies may start to hire permanent staff down the road.
Employers may be closer to the end of the trimming cycle and job creation may in fact be closer than previously anticipated, said Jim Baird, chief investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan.
Average hourly earnings inched up to $18.74 from $18.73.
For a graphic on the US jobs and unemployment data click on: http://link.reuters.com/vyk25g
(Reporting by Lucia Mutikani; Editing by Carole Vaporean)