WASHINGTON - The nation's unemployment rate edged up to 4.0 percent in November as job growth remained weak for a second consecutive month, the latest sign that the red-hot economy is cooling.
The Labor Department said it was the first increase in the jobless rate since August, when it rose to 4.1 percent. For the past two months, the unemployment rate has been at a 30-year low of 3.9 percent.
Economists had expected the jobless rate to tick up as a slowing economy reduced the need for new workers.
''We're slowing, not stumbling,'' said Bill Cheney, chief economist for John Hancock Financial Services.
The number of new payroll jobs created last month was up by just 94,000 after an even weaker increase of 77,000 in October. The weakness last month stemmed from a big, 54,000 loss in government jobs as cities and states cut back on education employment and the federal government hired fewer postal workers for the holiday.
On Wall Street, stocks rose on fresh evidence of a moderating economy. The Dow Jones industrial averaged gained around 70 points and the Nasdaq was up around 130 points in morning trading.
The Federal Reserve, trying to slow the economy to a more moderate pace as a way to keep inflation at bay, pushed interest rates up six times from June 1999 to May of this year.
Fed Chairman Alan Greenspan on Tuesday, in what was seen as a major shift in policy, said that economic growth slowed ''appreciably'' and policy-makers needed to be alert to unexpected shocks that could jeopardize the record-long economic expansion.
His comments triggered a huge one-day rally on Wall Street Tuesday as investors read Greenspan's comments as signaling the central bank was no longer considering raising interest rates and in fact stood ready to cut them if growth slowed abruptly.
Merrill Lynch's chief economist, Bruce Steinberg, believed Friday's report raised the odds of a rate cut as early as the Fed's first meeting in 2001 on Jan. 31.
Both George W. Bush and his running mate, Dick Cheney, have expressed concerns in recent days that the slowdown in economic growth may be threatening a full-blown recession and have said this is a major reason why Congress next year should pass the Republicans' $1.3 trillion tax cut proposal.
Over the past year, the jobless rate has stayed within a narrow range of 3.9 percent to 4.1 percent. The low rate was helped through June by sizzling economic growth rates, including a 5.6 percent annual growth rate for the gross domestic product in the April-June quarter.
However, growth slowed sharply in the summer with the gross domestic product rising at just a 2.4 percent rate in the July-September quarter, the weakest pace in four years.
Meanwhile, average hourly earnings, a key gauge of inflation pressures, rose for the second month in a row by 0.4 percent in November to $13.94 an hour, slightly faster than the 0.3 percent increase many analysts were expecting.
For the 12 months ending in November, earnings are up 4 percent, the largest year-over-year increase since January 1999.
While job and wage growth is good for workers, economists worry that a too-strong combination might worsen inflation. They fear that employers struggling to find workers will woo them with big boosts in wages and benefits, added costs that could be passed along to consumers as higher prices.
Greenspan said in his speech Tuesday that the recent increases in the weekly claims for unemployment benefits could be signaling that employers will have a bigger supply of workers in coming months.
In November, the gain in payroll jobs was weaker than many analysts expected. The slowdown in job growth provides dramatic evidence that the economy is shifting into a lower gear.
The private sector added 148,000 jobs in November, down sharply from an average increase of 202,000 for all of 1999 and a rate of 186,000 in the first six months of this year.
The growth in private-sector jobs was led by an increase by 65,000 service jobs, including increases of 15,000 at hospitals, 11,000 at computer and data processing companies and 12,000 at engineering firms.
Department stores added 38,000 jobs in November, compared with an average monthly loss of 3,000 jobs over the first 10 months of this year. Restaurants and bars added 17,000 jobs after three consecutive monthly losses.
However, amusement and recreation companies cut employment by 15,000.
Manufacturing added just 1,000 jobs in November after two months of large losses. The strength last month was centered at companies making electronic components, which added 8,000 jobs.
Employment at construction companies was down 6,000. The losses were blamed on unusually cold weather in November which curtailed outdoor work.
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On the Net: Employment report: http://www.bls.gov/news.release/empsit.toc.htm
