Last month was even worse for the labor market than most economists expected.

The economy lost 331,000 jobs in November, against expectations of 189,000 job losses. The unemployment rate ticked up to 5.7%, from 5.4% in October. The consensus forecast was for it to come in at 5.6%. The October data was also revised down. The Labor Department now says the economy lost 486,000 jobs, instead of 415,000 for the month, making it the worst drop since December 1974.

Bonds improved on the report. The benchmark 10-year Treasury note was lately up 21/32 to 100 17/32, dropping the yield to 4.93%. The reaction in equities, however, has so far been muted. At 1165, the December S&P 500 futures contract is only a couple of points lower than where it was before the report came out, pointing to a slight dip at the open.

Employment is considered a lagging indicator, and many investors may choose to hang their hats on recent economic activity data, which have generally improved more than forecast. Most economists, though, think the improvement is merely a snapback from the severely depressed levels that followed Sept. 11, and that the weak labor market will translate into a further weakening in demand over the next few months.