Unemployment Drops, But...

…mainly because a large number of discouraged Americans simply gave up and left the workforce.

Payroll gains in the U.S. picked up last month and the jobless rate unexpectedly fell to the lowest level since March 2009, a decline augmented by the departure of Americans from the labor force.

Payrolls climbed 120,000, after a revised 100,000 increase in October, with more than half the hiring coming from retailers and temporary help agencies, Labor Department figures showed today in Washington. The median estimate in a Bloomberg News survey called for a 125,000 gain. The unemployment rate declined to 8.6 percent from 9 percent.

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Revisions to prior reports added a total of 72,000 jobs to payrolls in September and October.

The unemployment rate, derived from a separate survey of households, was forecast to hold at 9 percent. The decrease in the jobless rate reflected a 278,000 gain in employment at the same time 315,000 Americans left the labor force.

“You’d like to see the unemployment rate coming down when people are coming into the job market, not disappearing,” James Glassman, senior economist at JP Morgan Chase & Co. in New York, said in an interview on “Bloomberg Surveillance” with Tom Keene. “That’s probably exaggerating the trend in unemployment.”

Private hiring, which excludes government agencies, rose 140,000 after a revised gain of 117,000. It was projected to rise by 150,000, the Bloomberg survey of economists showed.

A lot of the current hiring is also seasonal and temporary. There be layoffs coming in January.