Drop in US jobless rate may be only temporary

President Obama will unveil a plan next week to stimulate hiring.

WASHINGTON (AP) — A surprising drop in the unemployment rate and far fewer job losses last month raised hopes Friday for a sustained economic recovery.

The rate unexpectedly fell to 10 percent, from 10.2 percent in October, as employers cut the fewest number of jobs since the recession began. The government also said 159,000 fewer jobs were lost in September and October than first reported.

If part-time workers who want full-time jobs and laid-off workers who have given up looking for jobs are included, the so-called underemployment rate also fell, to 17.2 percent from 17.5 percent in October.

The better-than-expected figures provided a rare dose of good news for a labor market that’s lost 7.2 million jobs in two years. The unemployment rate hadn’t fallen since July. Still, the respite may be temporary.

Job creation is expected to remain far too weak in coming months to absorb the 15.4 million unemployed people who are seeking work — and the 11.5 million others who are underemployed. As more people begin seeking work, the jobless rate is likely to resume rising.

The report offered evidence of how hard it remains to find a job: The number of people unemployed for at least six months rose last month to 5.9 million. And the average length of unemployment has risen to more than 28 weeks, the longest on records dating to 1948.

Even counting last month’s decline, the unemployment rate has more than doubled since the recession began in December 2007, when it stood at 4.9 percent. And the underemployment rate has jumped to 17.2 percent from 8.7 percent.

“We will need very substantial job growth to get unemployment lower, especially when the labor force ... starts growing again,” said Lawrence Mishel, president of the Economic Policy Institute, a liberal think tank.

Carolyn Malone of Milwaukee hadn’t looked for a job for decades — until she was laid off from her customer service work in May. Malone, 62, laughed when asked Friday how many jobs she had applied for. She can’t remember. But she does recall how many landed her an interview: One. It didn’t lead to a job.

“I just want to get my toe in the door,” she said, scrolling through her e-mail at a hiring center.

President Barack Obama, speaking in Allentown, Pa., applauded the drop in job losses and put finishing touches on a proposal he’ll unveil next week to try to stimulate business hiring.

He will endorse sending new money to state and local governments to stem their layoffs and expanding a program that gives people cash incentives to fix up homes with energy-saving materials, a senior administration official said.

Obama will also endorse new tax breaks for small businesses that hire workers, said the official, who spoke on condition of anonymity because the package, and Obama’s speech, are still being crafted.

The stock market initially jumped in response to the jobs report, before giving up all its gains later in the day. In mid-afternoon trading, the Dow Jones industrial average was down about 18 points. Broader stock averages were mixed.

The increase in work hours means employees are earning more income, Riccadonna said, which could help boost consumer spending.

The Associated Press. All Rights Reserved.