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The US Labor Department has announced the unemployment rate fell to a five-year low of 7% in November.

Payroll figures also showed that 203,000 jobs were created last month, more than predicted, as the US economy displayed more signs of strength.

The monthly non-farm payroll figure is watched closely by economists.

Analysts say these indications of strong growth could mean that the Federal Reserve will start to unwind its massive stimulus programme soon.

However, the November figure might have been distorted. Some federal workers who were counted as jobless in the October – because of the 16-day partial government shutdown – returned to their jobs last month.

The latest data also showed that the October and September non-farm payroll figures, which had also been strong, were even better than their first estimates.

The US unemployment rate fell to a five-year low in November

The US unemployment rate fell to a five-year low in November

Job gains for those two months were revised upwards by 8,000.

Chris Williamson, chief economist at research firm Markit, said the data indicated the US labor market was “buoyant”.

“The decline pushes the jobless rate down to its lowest since November 2008 and closer towards the Fed’s threshold of 6.5%, which it wants to see breached before it considers tightening policy via higher interest rates,” he said.

But he added that a decision on when the Fed might start to taper its stimulus programme was still not clear cut.

The labor market figures follow news earlier this week that economic growth, as measured by GDP, in the third quarter of the year was revised up to an annual pace of 3.6% from a previous estimate of 2.8%.

Also on Friday, the US Commerce Department said that consumer spending increased in October, though wages and salaries were barely changed.