The unemployment rate fell in November to 8.6 percent as the economy added 120,000 new non-farm jobs, the U.S. Labor Department reported Friday.
It's the biggest drop in the jobless rate since the economic downturn began and the first time the rate has dropped below 9 percent since March 2009. Unemployment has remained stubbornly high since the recession began in 2008 -- the longest stretch that the jobless rate has remained over 8 percent since 1948.
"This is the best series of jobs reports, including revisions, we have seen in months," Stephen Bronars, senior economist with Welch Consulting, said.
But the news was not all rosy. Employment is growing but only 58.5 percent of adults are employed, down almost 4 percent from pre-recession levels, Bronars said. The unemployment rate does not include a growing number of people who have dropped out of the labor force.
Some 13.9 million people are out of work, and that does not include millions more who have stopped looking for work or made due with part-time work, Bronars said. He expects the unemployment rate to stay close to 9 percent well into 2012.
The Labor Department reported retail employment growth was strong last month along with business services and health care, which have been the strongest sectors for job growth over the past year.
Bronars said the household employment numbers have been "strong" over the past few months.
October's unemployment rate fell to 9 percent as the Bureau of Labor Statistics said that the economy added 80,000 jobs that month. The unemployment rate was 9.1 percent in September, then fell to 9 percent in October.
Bronars said he expected an increase in November payroll employment of 150,000 to 200,000 workers. Economists expected the unemployment rate to remain unchanged with 116,000 nonfarm payrolls in November, according to a survey by Bloomberg News.
A study by the John J. Heldrich Center for Workforce Development at Rutgers found that only 7 percent of those who lost jobs since the financial crisis have returned to or exceeded their previous financial position and maintained their lifestyles, The New York Times reported on Friday.
Unemployment claims were 402,000 for the week ending Nov. 26, the Labor Department announced Thursday. Claims increased 6,000 from the week's previous week's revised figure of 396,000.
The unemployment claims figure indicates hiring has still not returned to pre-recession levels, Bronars said.
The labor force was smaller last month than November of 2010 even though the adult population has grown by over 1.7 million in the past year, he said.
According to the labor department on Friday, the civilian labor force participation rate decreased by 0.2 percentage point to 64 percent. The employment-population ratio was nearly unchanged at 58.5 percent.
The number of persons employed part time for economic reasons dropped by 378,000 in November to 8.5 million. Sometimes referred to as involuntary part-time workers according to the Labor Department, they often work part time because their hours had been cut back or because they were unable to find a full-time job.
"I won't be surprised if the official unemployment rate creeps up as people start looking for work over the next few months," Bronars said. "So, although it's counterintuitive, an increase in the official unemployment rate over the next few months wouldn't necessarily be bad news."
The Federal Reserve last month cut its US economic growth forecast for 2012 and said unemployment will fall to 8.5 percent to 8.7 percent in the last quarter of 2012.
Bronars said private company payrolls were "encouraging," according to the monthly report from Automatic Data Processing (ADP) released on Wednesday.
That report showed private employment improved in November, with an addition of 206,000 jobs. Employment growth was three times faster at small employers compared to large employers, according to that report.
The economy must add about 400,000 jobs a month if the unemployment rate is to be reduced.
Bronars said the survey from the Bureau of Labor Statistics over-samples larger employers so he had expected Friday's report to show fewer job gains than that of ADP.
Other economic data has been mixed this week.
Retailers reported strong Black Friday sales, kicking off the holiday season which traditionally produces 20 percent of annual retail sales. Same-store sales rose 3.1 percent in November, according to Thomson Reuters. Costco and Macy's beat estimates while Target Corp., Kohl's Corp. and J.C. Penney Co. reported disappointing results. The Wall Street Journal reported weak November sales due to warmer temperatures and shoppers' expectation for deals after Thanksgiving.
The National Retail Federation estimates consumers spent an average of $398.62 on Black Friday weekend, up 9.1 percent from last year, with 38 percent from online sales.
"Retail sales have been better than expected but continuing uncertainty about the financial sector, the Eurozone debt crisis, and fiscal policy in the U.S. are likely to cause employment growth to be slower than we would normally see at this phase of an economic recovery," he said.
On Wednesday, the Federal Reserve and five other central banks reduced the cost of providing cash to European banks in an effort to improve liquidity in the European financial system. The move also boosted U.S. stocks.