Jobless Rate Highest Since 1995

The U.S. unemployment rate increased to 5.7% in November and payrolls declined for the fourth straight month, the Labor Department said Friday, in a report likely to give the Federal Reserve the green light to cut interest rates again.

The jobless rate, which increased from 5.4% in October, is now the highest since August 1995. The October and November job losses were the worst for any two months since May and June of 1980, Reuters said.

For the month, payrolls fell by 331,000, which was the fourth straight decline and was more than expected, Bloomberg reported.

Since employment levels drive so much economic activity, a slide in the job market can further weaken consumer confidence and spending patterns. It also shows that many businesses are still retrenching, which means fewer freight shipments than would be the case in a robust economy.

Factories lost 163,000 jobs in November, the 16th straight monthly drop, after eliminating 124,000 positions in October. Since July 2000, manufacturing has lost 1.4 million workers.

Since the recession began in March, the U.S. economy has lost a total of 1.2 million jobs, Labor said. That compares with 1.4 million jobs lost in the first eight months of the 1990-1991 recession, when the workforce was smaller.

Economists worry that many more jobs will be lost even if the U.S. is able to mount a recovery next year, the Associated Press reported. Many analysts are forecasting that the jobless rate will peak at 6.5% next summer.

This is a main reason why Fed policy makers are likely to cut rates by at least a quarter-point when it meets on Tuesday. It has already cut rates 11 times this year, bring the overnight bank lending rate to 2%, the lowest in 40 years.

Labor's report also showed that employment at service-producing companies fell by 164,000 in November after a 327,000 decline the previous month. Average hourly earnings rose 0.3%, or 5 cents, in November, while weekly earnings rose to $495.13 last month from $491.98 in October.