U.S. employment increased far less than expected in November and the jobless rate jumped to a seven-month high of 9.8 percent, dampening hopes for a self-sustaining economic recovery.

KEY POINTS: * Nonfarm payrolls rose 39,000, with private hiring gaining only 50,000, the Labor Department said. * However, overall employment for September and October was revised to show 38,000 more jobs than previously estimated. * Economists had expected payrolls to increase 140,000 last month and the unemployment rate to be unchanged at 9.6 percent.

COMMENTS:

JEFF KLEINTOP, CHIEF MARKET STRATEGIST, LPL FINANCIAL IN BOSTON:

Pretty disappointing, even though we've heard so much lately about retailers having to hire more folks ahead of the holiday season, yet retail jobs dropped 28,000 during the month of November. A bit of a surprise there.

This points to not necessarily a turning point in the data, it's been stronger in recent months, but maybe a reflection of how uneven the economic data is likely to and that maybe markets have gotten a little optimistic on the recovery we've seen since the summer's soft spot.

After a spate of much better-than-expected economic news in the last few weeks, this is a real reminder that the pace is still uneven.

GARY THAYER, CHIEF MACROSTRATEGIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI:

We're still seeing a difficult job environment. Private sector payrolls are expanding, but very slowly. Companies are still reluctant to hire. Meanwhile, we're getting more people entering the labor force to look for work. So the unemployment rate is going up instead of down.

ERIC GREEN, CHIEF ECONOMIST AND HEAD OF RATES STRATEGY, TD SECURITIES, NEW YORK:

You had a situation last month in which you had a very sharp increase in unadjusted jobs. You had a seasonal factor that effectively added on an adjusted basis an additional 200,000 relative to last November. You had a very, very strong month last month, some of the unadjusted jobs for November were pulled forward, so it was a situation in which you were primed for kind of some disappointment today.

The trend is still very, very positive. I would not want to overread this as a sign of weakness, this is more around wiggles in the technicalities of the underlying. The headline looks to be quite weak, but I would not rush to judgment and suggest that this is a disaster.

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

It was a disappointing report after a string of reasonably good figures on the U.S. economy. It's not the end of the world; we're still creating jobs and the September and October figures were revised up. So the market expects that another 25,000 jobs could be found later in the November report.

What was particularly eye-catching was the jump in the unemployment rate to 9.8 percent, a sign that more people started to look for jobs, but couldn't find them. The rest of the report was mixed, but still disappointing. The average workweek did not change. Average hourly earnings did not increase, though there was an upward revision to October.

Most people will start penciling in lower GDP forecasts for the fourth quarter. I think a number around 2 percent is right because you're seeing the impact of a little bit of an inventory correction here.

NICK BENNENBROEK, CURRENCY STRATEGIST, WELLS FARGO, NEW YORK:

It will definitely lead to dollar weakness today and over the next few days. The dollar was having a good run the last several weeks, though we saw a turn lately as European concerns have eased slightly. But a softer-than-expected jobs number probably makes people a little more comfortable with the idea that the Fed will steadily progress with its planned quantitative easing. The question is, was the number so weak that it creates concern about the economy, market volatility and risk aversion? I think probably not. It's a disappointing number, but it's not bad enough to raise concerns of a renewed recession.

BERNARD BAUMOHL, MANAGING DIRECTOR AND CHIEF GLOBAL ECONOMIST, THE ECONOMIC OUTLOOK GROUP, PRINCETON, NEW JERSEY:

Obviously a surprise. It is very disappointing. I would have to assume that these numbers will be revised substantially upward next month as the government has been doing in previous months. Clearly this is not what was expected. We were looking for something much, much higher.

If these are the numbers that remain in coming months, then that is disconcerting. It doesn't seem to flow with some of the other very favorable numbers we've seen. There's an inconsistency here and we need to figure out what's going on. Seems like 99 percent of other indicators have all showed strength. This number is an outlier and we need to figure out why.

I would have expected unemployment rate to tick up, even if the payroll number had been stronger, just because Americans who had been discouraged are now back in the work force because they're more optimistic about finding a job. In a perverse way, it's a good sign.

MARKET REACTION:

STOCKS: U.S. stock index futures turned negative after the data.

BONDS: U.S. Treasuries shed earlier losses, turn strongly positive.

DOLLAR: Dollar falls sharply versus the yen and extends losses versus the euro.

Unemployment