U.S. employment barely grew in November and the jobless rate unexpectedly hit a seven-month high, hardening views the Federal Reserve would stick to its $600 billion plan to shore up the fragile recovery.

Nonfarm payrolls rose 39,000, with private hiring gaining only 50,000, just a third of what economists had expected, a Labor Department report showed on Friday.

The unemployment rate in November jumped to 9.8 percent, a troubling sign for an economy many thought was strengthening. Economists had expected 140,000 new jobs last month with the jobless rate holding steady.

The U.S. economy has yet to achieve the escape velocity needed to improve the worrisome jobs picture, said Mohamed El-Erian, co-chief investment officer at Pacific Investment Management Co. in Newport Beach, California.

Some analysts warned against reading too much into the data, which was out of step with other recent signs suggesting the recovery was picking up speed.

A separate report on Friday showed service sector activity rose in November, with a gauge of hiring reaching its highest level since October 2007, before the nation tumbled into recession.

U.S. stocks were down just marginally in morning trade. Government bond prices rose on the jobs data but pared gains after the service sector report was released, while the dollar was lower against the euro and the yen.

Helping to temper the disappointment with the weak November payroll figures was revised data for September and October that showed 38,000 more jobs were gained in those months than previously estimated.

One surprise in the report was the loss of 28,100 retail jobs last month despite expectations of a busy holiday shopping season. Some retailers waited until the last minute to hire and those jobs may not have been caught in the Labor Department's survey of employers.

A raft of recent data, including solid retail sales, had raised optimism the economy was accelerating after hitting a soft patch in the summer. That soft patch helped Republicans wrest control of the House of Representatives from Democrats in November elections.

Unemployment is expected to remain painfully high for years, a problem for President Barack Obama, who faces re-election in 2012.

In November, the jobless rate jumped partly because the survey of households on which it is based showed discouraged workers rejoined the labor force. However, that survey also showed a drop in employment.

ECONOMISTS SHOCKED, SOME LOOK FOR REVERSAL

It is very disappointing, said Bernard Baumohl, managing director and chief global economist at The Economic Outlook Group, Princeton, New Jersey. I would have to assume that these numbers will be revised substantially upward next month.

Concerns about joblessness and low inflation led to the Fed's decision last month to launch its now much-criticized plan to buy a further $600 billion in government bonds to push already low interest rates down further to lift demand.

The U.S. central bank cut overnight interest rates to near zero in December 2007 and had already bought $1.7 trillion in mortgage-related and government debt.

Traders in futures markets on Friday pushed expectations of an eventual increase in overnight rates out until mid-2012.

Employment in November was weak across the board, with government payrolls contracting as local authorities continue to struggle with budget problems.

Payrolls in the goods-producing sector fell 15,000, weighed down by a drop of 13,000 manufacturing jobs and the loss of 5,000 construction jobs.

Employment in the private service-providing sector rose 65,000 in November, with the weakness in the retail sector offset by strong hiring by professional and business services, and another big gain in temporary employment.

Economists often look to rising temporary employment as a harbinger of more permanent jobs to come, but temporary hiring has been strong for months, while payroll growth elsewhere has yet to gain a lot of traction.

The workweek was steady at 34.3 hours in November and average hourly earnings edged up 1 cent.

(Additional reporting by Jennifer Ablan and Michele Gershberg in New York; Editing by Andrea Ricci)

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