The jobless rate unexpectedly fell in October while employersadded fewer jobs than forecast, illustrating the “frustratinglyslow” progress cited by Federal Reserve Chairman Ben S. Bernankethis week.

The unemployment rate fell to a six-month low of 9 percent from9.1 percent, even as the labor force expanded. The 80,000 increasein payrolls followed gains in the prior two months that wererevised up by 102,000, Labor Department figures showed today inWashington.

The crisis in Europe and a looming deadline on U.S. budget talksmay be prompting companies to delay hiring on concern failure toreach resolutions will put the global recovery at risk. Fed policymakers project the jobless rate won't drop below 8 percent until2013 at the earliest, one reason why Bernanke this week saidadditional stimulus “remains on the table.”

“We're making progress at a very slow pace,” said John Silvia,chief economist at Wells Fargo Securities LLC in Charlotte, NorthCarolina, who projected an 85,000 gain in payrolls. “It indicatescontinued consumer spending, getting a little better over time. Thelabor market is consistent with moderate economic growth.”

The data also showed a pickup in hourly earnings, a drop inlong-term joblessness and a decrease in so-calledunder-employment.

Stocks fell as concern about Europe offset the decline in thejobless rate. The Standard & Poor's 500 Index slid 1.1 percentto 1,247.83 at 10:01 a.m. in New York. The yield on the benchmark10-year Treasury note declined to 2.05 percent from 2.07 percentlate yesterday.

The unemployment rate was forecast to hold at 9.1 percent,according to the median of 87 forecasts in a Bloomberg News surveyof economists. Payrolls were forecast to rise by 95,000.

Sustained payroll increases of around 150,000 a month are neededto bring unemployment down about half a percentage point over ayear, according to Chris Rupkey, chief financial economist at Bankof Tokyo-Mitsubishi UFJ Ltd. in New York.

Faster hiring would spur bigger gains in incomes and bolsterconfidence, helping cushion against declines in home prices andallowing households to sustain their spending. Purchases grew at a2.4 percent annual rate in the third quarter and the economyexpanded at a 2.5 percent pace, the Commerce Department reportedlast week.

Retailers like Macy's Inc. are adding staff, while companiessuch as Whirlpool Corp. plan to cut workers, evidence of an uneveneconomic recovery.

Macy's is among those betting last quarter's gain in spendingwill be sustained during the November-December holiday shoppingseason. The second-biggest U.S. department-store chain is steppingup hiring of mostly part-time employees by 4 percent for theperiod.

Whirlpool, the world's largest maker of household appliances,said it planned to cut more than 5,000 jobs and trimmed itsearnings forecast. The reductions will be primarily within NorthAmerica and Europe and include the closure of the refrigerationmanufacturing site in Fort Smith, Arkansas, by mid-2012.

“We are taking necessary actions to address a much morechallenging global economic environment,” Chief Executive OfficerJeff Fettig said in a statement on Oct. 28.

The payroll revisions for September and August put those numberscloser to the bigger gains in hiring seen in the separate survey ofhouseholds. The latter showed a 277,000 gain in employment forOctober, raising the odds that last month's payroll figures willalso be revised higher.

“There seems to be a disconnect between the payrolls survey andthe household survey, and we've been getting more on the householdside in the last few months, enough to bring the unemployment ratedown slightly,” said Robert Dye, chief economist at Comerica Inc.in Dallas.

Private hiring, which excludes government agencies, rose to104,000 after a revised gain of 191,000. It was projected to riseby 125,000, the survey showed.

Factory payrolls increased by 5,000, the first increase in threemonths.

Employment at service-providers increased 90,000 after a 129,000gain. Construction companies cut 20,000 jobs and retailers added17,800 employees, the most in three months.

Government payrolls decreased by 24,000. State and localgovernments cut employment by 22,000, while the federal governmenttrimmed 2,000 workers.

Average hourly earnings rose 0.2 percent to $23.19, while hoursworked held at 34.3 hours, today's report showed.

The so-called underemployment rate — which includes part- timeworkers who'd prefer a full-time position and people who want workbut have given up looking — decreased to 16.2 percent from 16.5percent.

The report also showed a decrease in long-term unemployedAmericans. The number of people unemployed for 27 weeks or moredecreased as a percentage of all jobless, to 42.4 percent from 44.6percent. It was last lower in November 2010.

The number of temporary workers increased 15,000. Payroll attemporary-help agencies often slow as companies seeing a steadyincrease in demand take on permanent staff.

Uncertainty over the amount and speed of reductions ingovernment spending is weighing on businesses as the Nov. 23deadline looms for the congressional supercommittee charged withcutting at least $1.2 trillion from the budget deficit. In thefiscal year ended Sept. 30, the government reported the second-highest annual deficit on record, $1.3 trillion.

Fed policy makers, who refrained from taking additional steps toease monetary policy at their meeting this week, said in astatement that there are “significant downside risks to theeconomic outlook.”

The central bank's latest forecasts showed less optimism aboutthe economy and employment. Policy makers project growth next yearof 2.5 percent to 2.9 percent, with unemployment in the 8.5 percentto 8.7 percent range. Joblessness in 2013 is forecast at 7.8percent to 8.2 percent.

Additional stimulus “remains on the table,” Bernanke said at aNov. 2 press conference in Washington, declining to specifyconditions that would prompt a move. “While we still expect thateconomic activity and labor market conditions will improvegradually over time, the pace of progress is likely to befrustratingly slow.”

Bloomberg