The US jobless rate fell sharply to 7.0 per cent in November, a five-year low, raising the odds that the Federal Reserve could soon cut its huge stimulus program.
The fall from 7.3 per cent in October was announced Friday and was unexpected. The economy generated a solid 203,000 jobs, picking up from the two previous months.
Job growth spread over the manufacturing, retail trade, health and professional service sectors, and suggested that US industry continues to gain confidence despite the continuing battles over the budget and spending cuts in Washington, which many economists have feared would slow hiring.
Analysts said the strength of the Labor Department report could give the Fed more reason to begin cutting back its $85 billion a month bond-buying program, aimed at boosting economic growth.
US stocks jumped on the news, with the S&P 500 gaining around 1 per cent after having declined for five sessions.
Investors have shown concern that the "taper" of the Fed's bond purchases will push up interest rates.
But Friday's financial markets took the good news as good news: after climbing modestly since early last week, US bond yields remained flat on Friday, and still below the year's highs.
The job creation numbers now show a clear rebound from the mid-year slump: the average for the past three months is 193,000 a month, up from 166,000 in the June-August period.
But the pace is still below the 207,000 a month level of the first quarter of 2013, which had sparked the Fed to begin reviewing when to reel in the stimulus.
And with fourth-quarter growth still expected to be sluggish, many analysts said that Fed policy makers would likely not decide to begin the taper at their meeting on December 17-18.
Instead, they predict the central bank would hold off to see whether the data is sustained over another month. Some other indicators, especially inflation, have been unexpectedly soft, suggesting the economy still has important weaknesses, more than four years after pulling out of deep recession.
"American businesses are shrugging off fiscal concerns and hiring fast enough to keep the jobless rate on a downward course. In response, consumers are spending faster," said economist Sal Guatieri of BMO Capital Markets.
"The solid jobs report will lift December tapering odds, but we still lean toward a January shift," he said.
Jim O'Sullivan of High Frequency Economics noted inflation remained tame, "probably tame enough to encourage the Fed to temporarily hold off on tapering for one more meeting."
The 7.0 per cent jobless rate had particular significance for monetary policy.
In June, when unemployment was at 7.6 per cent, Fed Chairman Ben Bernanke said that the Fed expects to have completely ended the stimulus program by mid-2014 - at which time the jobless rate likely would be down to 7.0 per cent.
Since then, however, uncertain about the economy, the Fed has held back on cutting the bond purchases. Yet the jobless rate has fallen faster than expected.
