U.S. recovery appears firmer as unemployment drops

The economy shed only 11,000 jobs in November, well below the 130,000 loss financial markets had braced for, while the unemployment rate unexpectedly dropped to 10 percent from October's 10.2 percent, government data showed on Friday.

The data from the Labour Department signalled a broad-based improvement in the jobs market. In addition, job losses in September and October were revised down by a total of 159,000, contributing to the strong tenor of the report.

"It suggests that the labour market is much closer to its trough and more synchronized with broader measures of economic growth," said Brian Fabbri, chief North America economist at BNP Paribas in New York.

Traders speculated the data could lead the Federal Reserve to raise interest rates sooner than had been thought.

That sent the dollar soaring and pushed down prices for U.S. government debt. Against a basket of currencies, the dollar posted its biggest gain in nearly five months. <.DXY>

U.S. and European stocks jumped on the data, although the U.S. market later fell back to trade close to flat as the rallying dollar weighed on commodity prices.

"The economy is lifting at a much greater rate than expected," said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York.

A separate report on factory orders for October showed a higher-than-expected 0.6 percent rise and the first gain in inventories in more than a year. Still, a subset of the data seen as a proxy for business investment retreated 3.4 percent.

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