Better job market to push Fed

The jobs picture in the United States brightened in November as hiring was stronger than expected and the unemployment rate fell to a five-year low, data that increases the likelihood of the Federal Reserve easing its stimulus efforts sooner rather than later.

Still, many observers cautioned that Friday's encouraging figures did not necessarily mean the central bank will act when policymakers meet later this month. A move early next year, they said, was the most likely scenario.

While the 203,000 jump in payrolls in November is an improvement over the 158,000-a-month rate of hiring that prevailed in the US summer, it is not much better than the 198,000 level in the first nine months of 2013.

"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 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 the economy has gained momentum very recently.

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

Although the holiday shopping season has had a mixed start, the retail sector added 22,000 jobs last month. Manufacturers hired 27,000 workers. And the overall participation rate rose 0.2 percentage points to 63 per cent, reversing a decline in recent months.

But the unemployment rate among workers aged 16 to 19 remains above 20 per cent.