WASHINGTON - Job losses in the United States slowed sharply in November, cushioned by seasonal adjustments and a budding economic recovery that is encouraging some companies to retain workers, a Reuters survey predicts.

Analysts said even without seasonal factors related to retail sector hiring, there were clear signs that the labor market was edging toward stability and the deterioration in nonfarm payrolls was in its final stages.

The survey of 72 economists forecast U.S. employers cut 130,000 jobs this month after reducing payrolls by 190,000 in October. While this would be the smallest decline since July last year, it would also mark the 23rd straight monthly drop in payrolls.

The unemployment rate, which is derived from the Labor Department's survey of households, was seen steady at a 26-1/2 year high of 10.2 percent.

The department will release its employment situation report on Friday.

One of the biggest factors is going to be the seasonal factor. We saw virtually no hiring in the retail sector last year. Seasonal factors will give a much more favorable weighting to the employment numbers (in November), said Lindsey Piegza, an economist at FTN Financial in New York.

Seasonal factors were based on 10 years of data, but last year had the biggest weight, she said, adding that outsized increases or declines tended to cause the seasonals to shift in the opposite direction a year later.

Payrolls fell 597,000 in November 2008, marking the first of the six biggest payroll declines in the recession, so we're looking for a positive shift this year which should be worth 50,000-75,000 jobs, Piegza said.

GOVERNMENT DRIVING GROWTH

A drop in the pace of job losses this month will be seen as more proof that the economy's recovery from the worst recession since the 1930s was gathering momentum. It will also help to ease fears over the durability of a recovery that is seen as being largely driven by government spending.

The U.S. economy started growing again in the third quarter after four successive quarters of contraction.

The labor market remains the single biggest threat to the emerging recovery, said Meny Grauman, an economist at CIBC World Markets in Toronto.

Payrolls could begin rising again in January, but the pace of improvement may be slowed down by the fact that even those Americans who have managed to hold on to their jobs during this downturn have, on average, seen their hours cut substantially.

Data ranging from regional manufacturing surveys to weekly new applications for state unemployment benefits have generally painted a picture of a labor market that is starting to settle down after an upheaval early this year.

Analysts will scrutinize November's employment report for more evidence of this. They will want to see if companies continued to hire temporary workers, after this segment of the labor market saw its biggest gain in October since the economy fell into recession.

The average workweek will also be watched for signs as to when firms will start hiring. The Reuters survey forecast the average workweek rising to 33.1 hours in November from 30 hours the previous month.

The rebound in business profits suggests the labor market deterioration is in its final stages, barring a relapse in financial conditions, said Joseph Brusuelas, an economist at Moody's Economy.com in West Chester, Pennsylvania.

With more sustained improvement in final demand, we see net job growth resuming in the second half of 2010.

Average hourly earnings were expected to rise 0.2 percent after gaining 0.3 percent in October.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

Unemployment