Nonfarm payrolls fell by just 11,000 last month, slowing down from a downwardly revised 111,000 drop seen in October, as the recovery encouraged some companies to retain workers, the Labor Department said Friday.

It was the best showing since December 2007, when the recession began and payrolls had risen by 120,000. Economists surveyed by Dow Jones Newswires had expected a payroll decrease of 125,000.

The unemployment rate, calculated using a survey of households as opposed to companies, edged lower to 10% in November from 10.2%. Economists had forecast the jobless rate would remain at October's level of 10.2%, when it rose to the highest level since April 1983.

Employment fell in construction, manufacturing, and information, while temporary help services and health care added jobs.

In a separate report, U.S. factory orders rose for the sixth time in seven months in October, posting a 0.6% gain on the heels of stronger than previously estimated growth in September. The increase beat expectations from economists surveyed by Dow Jones Newswires, who were expecting factory orders would be unchanged.

The payroll data reflect a notable improvement in the jobs market. In the prior three months, payroll job losses had averaged 135,000 a month.

"We are one step closer today to the stabilization of the labor market," said Chris Rupkey of Bank of Tokyo Mitsubishi. "The massive job cuts during the financial crisis last fall were too aggressive and firms will need to rehire staff within the next couple of months."

Employment in the service sector -- the main source of U.S. jobs -- rose by 58,000 in November. But that was more than offset by manufacturing companies shedding 41,000 jobs and construction companies cutting 27,000.

Health-care employment continued to rise in November, by 21,000. The industry has added 613,000 jobs since the recession began at the end of 2007.

Despite the better-than-expected report, the jobs market has still some way to recover. Since the start of the recession in December 2007, the number of unemployed has increased by almost eight million.

With unemployment still at a lofty 10%, the Federal Reserve's view that interest rates must remain at a record low to bolster a soft recovery should remain unchanged. The central bank left interest rates close to zero a month ago in the face of low inflation and still-high unemployment.

Fed Chairman Ben Bernanke Thursday told U.S. senators the central bank expects the unemployment rate to decline only slowly from next year as the economic recovery remains "moderate."

President Barack Obama is concerned about the persistently high jobless rate. His administration Thursday kicked off a jobs summit, with the president promising to take "every responsible step to accelerate job creation."

In minutes released after their Nov. 3-4 meeting, Fed officials said they expect the jobless rate to remain between 9.3% and 9.7% by this time next year, and to settle above 8% in 2011, levels usually seen in recessions.

The U.S. economy expanded in the third quarter for the first time in more than a year, growing an annual 2.8%, but the jobs market's weakness and tight bank lending is expected to keep the recovery contained.

Friday's report showed that average hourly earnings rose by 0.1%, or $0.01, to $18.74.

The average workweek rose by 0.2 hour to 33.2 hours in November.

Factory Orders Rise in October
The U.S. valued its October factory orders at a seasonally adjusted $360.5 billion in October, the Commerce Department said Friday.

The Commerce Department's report showed sluggish demand for durable goods, those meant to last at least three years, while showing a stronger appetite for nondurable goods.

Durable goods orders dipped 0.6%, in line with a government estimate released last week. Meanwhile, orders for nondurable goods rose 1.6.% following an upwardly revised 1.1% climb in September.

Factory orders for the first 10 months of the year are 20.7% below their level in 2008, showing just how much wind the recession has taken out o the manufacturing sector.

Still, the Institute for Supply Management earlier this week reported its manufacturing index grew for the fourth consecutive month in November. However, the index came in at 53.6, below October's level of 55.7. Any level above 50 is seen as an indication of growth.

Friday's Commerce Department report showed capital goods spending slipped 2.1% in October

Excluding the defense sector, factory orders climbed 1.1% in the month, following a 1.5% increase in September.

Non-defense capital goods orders, a category that includes business equipment meant to last at least a decade, crept upward by 0.7%. Orders for defense related capital goods meanwhile slid 16.7%.

Motor vehicle orders grew 0.4%. Orders from the transportation sector rose 1.6%. Excluding the transportation sector, October factory orders were up 0.5%

The Commerce Department data also showed manufacturers' inventories grew 0.4%.

Unfilled orders, a sign of future demand, dipped for the 13th consecutive month, falling 0.4%.

Shipments of all factory goods in October climbed 0.8%.