Unemployment hits five year low in US

US employers hired more workers than expected in November and the jobless rate hit a five-year low of 7.0 percent, raising chances the Federal Reserve could start ratcheting back its bond-buying stimulus as soon as this month, Reuters reported.

Nonfarm payrolls increased by 203,000 new jobs last month, following a similarly robust rise in October, the Labor Department said on Friday. The report, which showed broad gains in employment and a rise in hourly earnings, suggested strength in the economy heading into year-end.

"It will add further confidence to the Fed of a reduced need for monetary stimulus in the US economy. We now see the bias shifting in favor of a January tapering announcement," said Millan Mulraine, senior economist at TD Securities in New York.

The unemployment rate dropped three tenths of a percentage point to its lowest level since November 2008 as some federal employees who were counted as jobless in October returned to work after a 16-day partial shutdown of the government.

The decline came even as the participation rate - the share of working-age Americans who either have a job or are looking for one - bounced back from October's 35-1/2-year low.

Contributing to the report's firm tone, the average length of the workweek reached a three-month high and 8,000 more workers were hired in September and October than previously reported.

In addition, a measure of underemployment that includes people who want a job but who have given up searching and those working part-time because they cannot find full-time jobs fell to a five-year low.

US benchmark Treasury yields hit a three-month high as traders raised bets the Fed could reduce its bond purchases as early as its next meeting on December 17-18, though they later eased back. Benchmark U.S. stock indexes rose by the most in a month and the dollar rallied against the yen.

The financial market reaction showed investors are less anxious about the Fed's impending wind down of asset buying than six months ago, when the first hints from Fed leaders of a pullback sent stock prices tumbling and bond yields surging.

The central bank has been buying $85 billion in Treasury and mortgage-backed bonds each month to hold long-term borrowing costs down in a bid to spur a stronger economic recovery.

Improving labor market prospects buoyed consumer confidence in early December. The Thomson Reuters/University of Michigan's preliminary consumer sentiment index jumped to 82.5 from 75.1 in November, a separate report showed.