Employers added 120,000 jobs in November, sending the unemployment rate down to 8.6%.

Employers added 120,000 jobs in November, sending the unemployment rate down to 8.6%.

WASHINGTON (CNNMoney) — Hiring accelerated in November, and the unemployment rate unexpectedly plummeted to its lowest rate in nearly three years.

Employers added 120,000 jobs in November, the Labor Department reported Friday, marking a pick-up in hiring from October.

Meanwhile, the unemployment rate fell to 8.6%, the lowest rate since March 2009 and a significant decline from 9% just a month before.

It’s too early to bust out the champagne though. The unemployment rate fell for two reasons: yes, more Americans got jobs, but at the same time, even more people gave up on their job searches altogether.

Men were the biggest group to benefit from a stronger labor market, as the unemployment rate for those over age 20 fell to 8.3% from 8.8% in October, primarily because they landed jobs. The women’s unemployment rate however, experienced a much smaller dip, mostly because more women had left the labor force.

“It’s always important to keep in mind, the unemployment rate can bounce around, depending on who is actively looking for jobs,” said Paul Ballew, chief economist for Nationwide.

Still though, this bounce was much better than expected. Economists surveyed by CNNMoney had expected the unemployment rate to remain unchanged, and a gain of 110,000 jobs.

Job growth from the two prior months was also stronger than originally reported. An additional 72,000 jobs were added during September and October combined.

Private businesses have been leading the charge, while the government has continued to bleed jobs, primarily at the state and local level. The public sector cut 20,000 jobs in November, while private employers added 140,000 jobs.

The retail industry alone added about 50,000 jobs, more than half of which were at clothing and accessory stores, while the leisure and hospitality industry added 22,000 jobs, mostly at restaurants. Because the Labor Department adjusts its numbers to account for seasonal trends, job growth in those industries is not necessarily because of holiday hiring alone.

“Retailers realized consumer demand was going to be stronger than had been anticipated,” said Patrick O’Keefe, director of economic research at J.H. Cohn. “It’s confirmation that more of them are taking an optimistic view — but still many of those jobs could prove to be temporary in nature.”

The government’s monthly jobs report is compiled from two separate surveys: one that polls businesses and another that polls households. While businesses have reported mild job growth this year, the household report has shown much stronger gains, averaging around 320,000 jobs created each month since August.

Since the recession, the report has become one of the most closely watched economic indicators. Stocks headed higher Friday, and the White House cautiously welcomed the news, pointing out “the pace of improvement is still not fast enough given the large job losses from the recession that began in December 2007.”

Overall, the labor market still has a long way to go to recover from the financial crisis. Less than a third of all the 8.8 million jobs shed have since been recovered. A whopping 13.3 million people remain unemployed and 43% of those have been out of work for more than six months.

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