People wait in line to enter a job fair Friday, Dec. 2, 2011, in, Portland, Ore. The unemployment rate fell last month to its lowest level in more than two and a half years, as employers stepped up hiring in response to the slowly improving economy. (AP Photo/Rick Bowmer)
WASHINGTON -- The unemployment rate, which has refused to budge from the 9 percent neighborhood for two and a half frustrating years, suddenly dropped in November, driven in part by small businesses that finally see reason to hope and hire.
Economists said there was a long way to go, but they liked what they saw.
The rate fell to 8.6 percent, the lowest since March 2009, two months after President Barack Obama took office. Unemployment passed 9 percent that spring and had stayed there or higher for all but two months since then.
The country added 120,000 jobs in November, the Labor Department said Friday. The economy has generated 100,000 or more jobs five months in a row -- the first time that has happened since April 2006, well before the Great Recession.
"Something good is stirring in the U.S. economy," Ian Shepherdson, an economist at High Frequency Economics, said in a note to clients.
The stock market finished flat for the day but up 787 points for the week. The only bigger point gain in a week was in October 2008, when stocks lurched higher and lower during the financial crisis.
The report showed that September and October were stronger months for the job market than first estimated. For four months in a row, the government has revised job growth figures higher for previous months.
September was revised up by 52,000 jobs, for a gain of 210,000. October was revised up by 20,000, for a gain of 100,000.
Unemployment peaked at 10.1 percent in October 2009, four months after the Great Recession ended. It dipped to 8.9 percent last February and 8.8 percent last March but otherwise was at or above 9 percent.
Obama, who faces a re-election vote in less than a year and a presidential campaign that will turn on the economy, seized on the decline to argue for expanding a cut in the tax that workers pay toward Social Security.
The tax cut affects 160 million Americans. It lowers the Social Security tax by up to $2,136 a year. A worker earning $50,000 a year saves $1,000 with the tax cut. It will expire Dec. 31 unless Congress acts.
Republicans and Democrats have supported an extension but differ on how to pay for it. The Senate on Thursday defeated plans from both parties. Republicans had proposed paying for the cut by freezing the pay of federal workers through 2015. Democrats wanted to raise taxes on people making $1 million or more a year.
"Now is not the time to slam the brakes on the recovery. Right now it's time to step on the gas," Obama said Friday.
Inside the unemployment report, one of the most closely watched indicators of the economy's health, were signs of improvement for small businesses, which employ 500 or fewer people and account for half the jobs in the private sector.
The government uses a survey of mostly large companies and government agencies to determine how many jobs were added or lost each month. It uses a separate survey of households to determine the unemployment rate.
The household survey picks up hiring by companies of all sizes, including small businesses and companies just getting off the ground. It also includes farm workers and the self-employed, who aren't included in the survey of companies.