Surprise fall in US unemployment rate

The rate of unemployment in the United States fell unexpectedly in November, providing immediate cheer for traders in New York and around the world.

Just 11,000 jobs were axed during the month, far less than the 130,000 predicted and a drastic fall on the revised figures for the previous month.

Within an hour of the announcement the benchmark FTSE 100 had reversed an earlier modest loss to stand 60 points higher.

The US Bureau of Labour Statistics showed that the headline rate of joblessness now stands at 10%, down from the 10.2% recorded in October.

America now has 15.4 million unemployed men and women. In December 2007 at the beginning of the recession this figure stood at 7.5 million, or 4.5% of the working population.

Although still running in double figures, today’s announcement was welcomed by economists and markets alike.

Many experts had expected the headline rate to remain the same at best.

But figures showed that in November job losses in construction and manufacturing were offset by recruitment in the health care sector and temporary help services.

The number of people made redundant in the month was the lowest since the beginning of the recession.

The Bureau’s statistics also indicated that the number of people looking for work shrank, suggesting that some unemployed people were simply giving up on an immediate return to the working world.

Responding to the news, Heidi Shierholz of the Economic Policy Institute said: “All told, this report shows that there is finally some healing in the labour market, as indicated by both increased hours and payroll employment remaining essentially unchanged.

“Unemployment, however, is expected to continue on an upward trend until we start adding jobs in a healthy way, which will likely not happen until next spring or summer.”

Nonetheless it provided immediate relief for markets.

In Wall Street, the benchmark Dow Jones Industrial Average was up 140-plus points in early trading.

Likewise in London the news was cheered, with the FTSE 100 Index up 57 points to 5369.