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Eyes Turn To The Fed As Unemployment Rate Falls To 5-Year Low

(This post was updated at 10:15 a.m. ET)

The nation's unemployment rate dropped to 7 percent — the lowest mark in five years — and employers added 203,000 jobs to payrolls last month, the Bureau of Labor Statistics reported Friday.

The latest data could build anticipation that the Federal Reserve might taper its stimulus program.

"It's a significant report for the Fed to decide whether to begin winding down its bond-buying stimulus program," NPR's Yuki Noguchi tells Morning Edition. "They've been buying $85 billion a month in mortgage-backed securities, which is basically like a money spigot, putting money back into the economy. And they've been debating when to turn that money spigot off."

The November numbers were slightly higher than the 200,000 jobs added in October, when the unemployment rate stood at 7.3 percent. The latest results also beat economists' estimates of 183,000 jobs, according to a CNN Money survey. Analysts also expected an unemployment rate of 7.2 percent last month.

The Department of Labor attributed the November gains to increased hiring in transportation and warehousing, health care and manufacturing.

Friday's BLS report also says the number of people who said they were temporarily laid off fell by 377,000 — an effect of the recent partial government shutdown, when thousands of federal workers were furloughed for more than two weeks.

While the November jobs report is largely positive, MarketWatch notes that there are some caveats:

"As many as one-fourth of the jobs created last month could reflect seasonal hiring that will dissipate after the holidays. And the number of long-term unemployed — people out of work for at least six months — was basically unchanged in November at 4.1 million."

Still, The Associated Press says the economy "has now generated a four-month average of 204,000 jobs from August through November. That's up from 159,000 a month from April through July.

It's not clear whether that growth will be enough to spur the Fed to change course when officials meet Dec. 17-18

Economist Hugh Johnson says "it's anybody's guess" when the Fed will move to taper stimulus buying. Before that happens, he says, the central bank wants to be sure the U.S. recovery is sustainable.

"It could be this month, we could see it at the end of January, that they begin to taper," he tells our Newscast unit.

But Johnson also says he believes the Fed will keep its target interest rates at rock-bottom levels for the next year, even as it reins in the stimulus buying program. And he reminds us that it's all because of good economic news.

"We have four successive months where we've got increases in jobs being created in the manufacturing sector of the economy," Johnson says, "and even more than that of construction employment being on the increase. And that's very good news, or prospects, for 2014."

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Bill Chappell is a writer and editor on the News Desk in the heart of NPR's newsroom in Washington, D.C.