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Lowest jobless rate in 5 years raises chances of a Fed move

Job seekers at a career fair in New York in October 2012. More workers were hired than expected last month.

Mike Segar/Reuters/File

Job seekers at a career fair in New York in October 2012. More workers were hired than expected last month.

NEW YORK — After years of frustrating fits and starts after the financial crisis and the Great Recession, the US job market finally appears to be on a path of steady but sustainable improvement. The unemployment rate in November fell to its lowest level since the end of 2008.

Employers have hired at least 200,000 workers in three of the last four months, including 203,000 in November. By contrast, as recently as July, when the economy seemed stuck in yet another summer doldrums, only 89,000 new jobs were created.

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At 7 percent, the unemployment rate last month also is the best reading since President Obama took office, one bright spot for a White House beleaguered on many other fronts.

“It’s strong across the board,” said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh. “There is nothing in here not to like.”

The gap between the US and Massachusetts unemployment rates has narrowed substantially in recent months. In March, the state jobless rate stood at 6.4 percent compared to 7.6 percent nationally. By October, the Massachusetts rate had risen to 7.2 percent, compared to 7.3 nationally.

The state releases unemployment statistics for November in about two weeks.

 The better-than-expected national report from the Labor Department on Friday follows other hopeful economic indicators this week, including an upward revision for economic growth in the third quarter Thursday and an uptick in manufacturing reported Monday.

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As a result, experts say the Federal Reserve will probably begin easing back on its stimulus efforts sooner rather than later, although they say policy makers are more likely to act in early 2014 rather than at their next meeting later this month.

“We think the chance of tapering this month has risen, but on balance we expect the Fed to wait a bit longer,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

While Wall Street has been jittery about the prospect of the tapering by the Fed, investors reacted positively Friday, sending major stock market indexes up by more than 1 percent.

Michael Gapen, senior US economist at Barclays, echoed Shepherdson’s view in terms of the Fed’s timing. “We consider it a strong report, but it’s not something that would cause the Fed to move,” he said. “Our scenario is still March.”

While the return of hundreds of thousands of federal employees after October’s government shutdown may have exaggerated the move in the unemployment rate for November, the continuing payroll gains suggest that the economy has picked up momentum very recently.

In November, the jobless rate dropped to 7 percent. Economists surveyed by Bloomberg before the Labor Department announcement had expected an increase of 185,000 jobs, with the unemployment rate falling by 0.1 percentage point to 7.2 percent.

Faucher noted that hourly earnings and the length of the typical workweek had both increased slightly in November. And employment increased in both the public and private sectors, despite continuing austerity at the federal level.

Payrolls are tracked using data gathered from employers, while the unemployment rate is based on a separate survey of households.

On Wall Street, the monthly report on the labor market is by far the most closely watched economic indicator, but the November data created more anticipation than usual, because the Federal Reserve seems poised to begin slowly easing back on its stimulus efforts.

The move had been expected in September, but it was put off amid mixed economic data instead of the sustained signs of improvement policy makers want to see. The delay by the central bank caught Wall Street off guard three months ago.

Although the holiday shopping season seems to have gotten off to a mixed start, the retail sector added 22,000 jobs last month. Manufacturing, a sector that is closely watched as a bellwether for the broader economy, hired 27,000 workers.

And the overall participation rate rose 0.2 percentage point to 63 percent, reversing a decline in recent months.

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