By Lucia Mutikani
WASHINGTON (Reuters) - U.S. employers cut far fewer jobs than expected last month in the best showing for the labor market since the recession began, lifting the U.S. dollar and global stock prices on signs of a stronger economic recovery.
The economy shed only 11,000 jobs in November, well below the 130,000 loss financial markets had braced for, while the unemployment rate unexpectedly dropped to 10 percent from October's 10.2 percent, a government report Friday showed.
The labor market improvement was broad based as the number of job losses in September and October was also revised down by a total of 159,000, according to the Labor Department.
"These numbers are almost too good to be true," said Tom Sowanick, chief investment officer at the OmniVest Group in Princeton, New Jersey.
U.S. stocks shot up, with key indexes rising more than 1 percent, while global stocks erased losses. U.S. Treasury debt prices fell and the dollar firmed as traders speculated the data could lead the Federal Reserve to raise interest rates sooner than had been thought.
"We're almost back to normal," said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York. "The economy is lifting at a much greater rate than expected."
Analysts had expected the unemployment rate to hold steady at a 26-1/2 year high of 10.2 percent.
A separate report on factory orders for October showed a higher-than-expected 0.6 percent rise. Still, a subset of the data seen as a proxy for business investment retreated 3.4 percent.
HELP FOR OBAMA
High unemployment is a political headache for President Barack Obama and fellow Democrats, who are worried they will lose seats in Congress in next November's elections without a faster recovery,
Despite November's improving numbers, the Obama administration made clear it was still focused on job creation.
"I wouldn't say that we're totally out of the woods yet because the number of unemployed is still high. It's very, very high and it's unacceptable, and we need to continue our efforts to focus in on job creation," Labor Secretary Hilda Solis told Reuters Television.
Thursday, Obama appealed to the corporate sector to join in the administration's employment-creation efforts, and the White House said Friday the president would use a speech next week to discuss tapping the government's $700 billion financial rescue fund to spur job creation.
Republicans have warned against using the Troubled Asset Relief Program as a political slush fund and have hammered the administration for steep job losses.
"The unemployment rate remains far too high and far too many Americans continue to ask where are the jobs," Republican Representative David Camp said.
While the economy resumed growth in the third quarter after four straight quarters of decline, economists have been concerned labor market weakness would prevent the recovery from becoming self-sustaining.
"The data point to a transition in the economy from a deep recession to a modest recovery," said William Sullivan, chief economist at JVB Financial Group in Boca Raton, Florida.
"This will encourage the Fed to be more vocal about an exit strategy from their highly accommodative posture," he said.
The Fed cut interest rates close to zero last December and has pumped more than $1 trillion into the economy to try to spur recovery from the worst recession in 70 years.
Since December 2007 when the recession began, 7.2 million jobs have been lost, the Labor Department said. But the pace of layoffs has slowed sharply from early this year.
The November data was the strongest since December 2007 when non-farm payrolls increased by 120,000.
Four sectors, including the government, added jobs last month. Manufacturing payrolls fell by 41,000 after dropping 51,000 in October.
The construction sector shed 27,000 jobs, a sharp easing from the average 63,000 decline seen in the prior six months, while the service-providing sector added 58,000 workers, up from an addition of 2,000 jobs in October.
Rising temporary hiring and the gain in the average workweek suggest companies may start to hire permanent staff down the road.
"Employers may be closer to the end of the trimming cycle and job creation may in fact be closer than previously anticipated," said Jim Baird, chief investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan.
For a graphic on the US jobs and unemployment data click on: http://link.reuters.com/vyk25g
(Reporting by Lucia Mutikani; Editing by Kenneth Barry)
