US employment increased by far less than expected in November and the jobless rate jumped to a seven-month high of 9.8%, dampening hopes for a self-sustaining economic recovery.
Figures released this afternoon show that employment figures rose 39,000, with private hiring gaining only 50,000, the US Labor Department said.
However, overall employment for September and October was revised to show 38,000 more jobs than previously estimated.
Economists had expected the employment figures to increase 140,000 last month and the unemployment rate to be unchanged at 9.6%.
Recently released data, including retail sales, had raised optimism the economy was accelerating after hitting a soft patch in the summer.
The separately released household survey also showed a decline in employment.
The weak employment rate will embolden the US Federal Reserve to fully implement its controversial $600 billion program to buy long-term government debt.
The purchases are designed to push already low interest rates down further to stimulate demand.
Concerns about joblessness and low inflation led to the US central bank's decision last month to launch its second round of quantitative easing.
Employment in November was weak across the board, with the number of people in employed by government contracting as local authorities continue to struggle with budget problems.
Employment in the goods-producing sector fell 15,000, weighed down by a manufacturing fall of 13,000 and construction shedding 5,000 jobs.
Employment in the private service-providing sector rose 65,000 in November, though retail hiring fell 28,100 despite expectations of a busy holiday season.
Slightly faster US services growth
The US services sector expanded for the 11th straight month in November, picking up the pace slightly as businesses saw glimmers of hope in the weak US economic recovery.
The Institute of Supply Management said its purchasing managers index (PMI) rose to 55 from 54.3 in October, better than the 54.5 expected by most analysts.
The November reading indicates 'continued growth in the non-manufacturing sector at a slightly faster rate,' Anthony Nieves of the ISM said in a statement. November was the 11th consecutive month with PMI above 50, the break-even point between expansion and contraction.
