Unemployment Rises to 9.8 Percent

Before Friday morning's announcement, more than 80 economists polled by Bloomberg News Service had predicted on average a gain of 150,000 jobs in November, based on their readings that economic indicators were showing some improvement. Instead, the government's figure was roughly a quarter of that.

The government report showed that jobs in temporary help services and in health care continued to rise in November. But employment fell in retail trade, surprising analysts who expected employers to beef up staff ahead of the holiday season. The government and the manufacturing industry continued to shed jobs.

Labor market continues to limp

Sophia Koropeckyj, an economist at Moody's economy.com, predicts that the labor market will limp along through the end of next year, or the beginning of 2012, as employers continue to hold off on permanent hires. She says the uncertainty of tax and health care reforms, as well as the economic downturn in Europe, add to employers' concerns.

"We do expect that the unemployment rate will reach 10 percent in the middle of next year because the economy will not create a sufficient number of jobs to keep the unemployment rate stable," she says. "Employers are still leery about adding to payrolls even though big companies are very profitable — and their profits are generated because of cost cutting. They're doing more with fewer workers but there's a limit to that. You can only ask people to do so much."

The monthly labor report was no surprise to John A. Challenger, chief executive officer of the outplacement firm Challenger, Gray & Christmas in Chicago. The company released a report on Wednesday that said employers announced payroll reductions of 48,711 jobs in November, the highest level in eight months. That was 28 percent higher than the planned layoffs reported in October.

Cuts still less than last year

Despite the increase, this year's job cuts were lower than last year's, the report said. Employers announced 497,969 job cuts from January through November, a 60 percent decline from the 1.2 million layoffs during the same period a year ago.

"Government and nonprofit job cuts are down 16 percent from a year ago," Challenger said in a statement, "but that is probably little consolation to employees in the sector, which is still struggling despite signs of recovery in other areas of the economy."

At the same time, the report noted hiring announcements totalling 26,012 workers in November.

Carole Fleck is a senior editor at the AARP Bulletin.