Jobless Rate Unexpectedly Surges to 6 Percent, Payrolls Shrink

The nation's unemployment rate unexpectedly shot up to 6.0 percent in November and employers hacked their payrolls by the largest amount since February, the government said Friday.

The report, released Friday by the Labor Department, portrayed a bleak snapshot of the U.S. economy at a time when many analysts had thought that rock bottom days for job seekers were behind them.

Private economists had been braced for an increase in that rate to only 5.8 percent. The jobless rate hit its highest level since April, vaulting three-tenths of a percentage point from October's 5.7 percent, according to the Labor Department.

And the number of workers on U.S. payrolls outside the farm sector actually shrank by 40,000 last month, a worrisome showing compared to the 38,000 gain projected by U.S. economists in a Reuters survey.

Friday's report surprised analysts, who thought the unemployment rate may benefit from stabilizing layoffs and fewer workers seeking unemployment compensation in recent weeks.

That had created optimism for the holiday shopping season -- a hope that workers were lining up at cash registers rather than at unemployment offices. Consumer spending accounts for two-thirds of all economic activity in the United States and has been the main force keeping the economy going all year.

Low mortgage rates, tax cuts, and extra cash coming from a refinancing boom have helped to support consumer spending, offsetting some negative factors, including the roller-coaster stock market, a possible war and a string of corporate scandals.

Still, economists did not expect companies to go on a hiring spree. In the face of the struggling recovery and economic uncertainties, companies are keeping their work forces lean.

The report showed that employment in the nation's factories continued to decline, with a loss of 45,000 jobs last month. Hiring also was down in retail, mostly because of weak hiring during a time that stores typically build up work forces for the holiday shopping rush.

Countering those job losses was an overall hiring increase in services. Health-related companies made up more than half of the November increase, with notable gains in hospitals and nursing facilities. But employment in temporary employment firms -- an industry where hiring had been on the upswing for much of the year -- fell for the second month in a row. Such employment is closely watched by economists because companies often seek temporary help as their businesses start growing again instead of taking on full-time workers.

Other major industries showed little change last month, including construction and government, which had a large gain in October.

Reuters and the Associated Press contributed to this report.