The New York Times

By MOTOKO RICH

Published: December 3, 2010

Few New Jobs as Jobless Rate Rises to 9.8%

After several months of improvement, hiring by businesses slowed to a crawl in November, a development that is sure to intensify the debate over what can and should be done to reignite the economy. The United States added a total of just 39,000 jobs last month, down from an upwardly revised gain of 172,000 in October, the Labor Department reported on Friday. With local governments shedding jobs, the additions in the private sector were too small to reduce the ranks of the unemployed or even to keep pace with people entering the work force.

The unemployment rate, which is based on a separate survey of households, rose to 9.8 percent in November. It was the highest jobless rate since April and up from 9.6 percent in October.

The outlook remains bleak. More than 15 million people are out of work, among them 6.3 million who have been jobless for six months or longer. Many are about to exhaust their unemployment benefits, which have been extended repeatedly by the government because of the severity of the downturn.

The latest snapshot of the labor market cast a pall over what had been a brightening picture of a steadying economy. In recent weeks, the average number of people applying for unemployment benefits has generally declined. Pending home sales topped forecasts in October, while last month retail sales posted one of the biggest increases in years.

The anemic job figures could lend support to the Obama administration’s call to extend unemployment benefits as well as to recent efforts by Ben S. Bernanke, the Federal Reserve chairman, to continue to stimulate the economy.

Plodding economic growth, however, seems insufficient to persuade businesses to hire.

“Obviously this is a disappointing report, to say the least,” James F. O’Sullivan, chief economist at MF Global, said of the monthly jobs data. But given other promising signs, he said, he did not believe the recovery had been derailed. “Certainly the weight of evidence is that the economy is improving.”

Austan Goolsbee, chairman of the president’s Council of Economic Advisers, said, “This highlights that the recovery is fragile.” In addition to pressing for an extension of unemployment benefits, he called for a continuation of what are known as the Bush tax cuts for the middle class as well as a collection of proposals that the White House is now referring to as the Obama tax cuts.

“To have taxes go up on 98 percent of Americans,” Mr. Goolsbee said, “would pose a risk to the aggregate economic performance.”

The weak November job numbers will also feed the politically charged debate over whether the government should seek to aggressively reduce the deficit or be willing to spend more until the economy returns to better health.

The stock markets shrugged off the report, which was well shy of the forecast for a gain of 150,000 jobs, as all the major indexes rose slightly on Friday.

Part of the surprise in the November report was that layoffs, which had subsided earlier this year, picked up again. The number of people who were unemployed because they had been laid off or had concluded a temporary assignment increased by 390,000.

Private companies, which have been hiring since the beginning of the year, added 50,000 jobs in November. Most of those increases came in the temporary help and health care sectors. Manufacturers, which had demonstrated some strength earlier in the year, eliminated 13,000 jobs, and despite recent sales increases, the retail sector shed more than 28,000 jobs. One sign of continued insecurity among employers was that temporary workers accounted for 40,000 of the jobs added in the private sector. Staffing firms said companies were continuing to use contract workers to fill gaps rather than binding themselves to permanent employees.

Employers are “still in the position of saying, ‘Hey, we need help, but only when we absolutely have to do we commit to permanent hiring,’ ” said Tig Gilliam, chief executive of Adecco North America. “That uncertainty takes time to overcome.”

Included in the latest report were revisions for previous months. The agency said that the economy added 172,000 jobs in October, more than the 151,000 it originally reported.

Many risks remain for the economy. The latest report showed 14,000 jobs were cut by local governments, a decline that could accelerate if states and towns were required to prune further to deal with shrinking budgets and larger deficits.