Jobless Rate at 10-Month High of 5.4% : Economy: Government report stirs concern that the nation is flirting with recession.

Unemployment climbed to a 10-month high of 5.4% in November and manufacturing payrolls shrank for the eighth consecutive month, the government said today in a report many analysts said showed the economy was flirting with recession.

The increase in the jobless rate from 5.3% to 5.4% came despite the addition of 210,000 non-farm jobs last month. A big jump in the number of Americans looking for work accounted for the rise.

In California, the November jobless rate rose to 5% from 4.8% in October.

The 210,000 new non-farm jobs reported nationwide by the Labor Department was in itself a moderately strong number, but the government also sharply cut its job growth figures for October from 233,000 to 93,000. That brought the average month-to-month job gain for the second half of the year to about 160,000--well off the average monthly gain of 270,000 for the previous 2 1/2 years. All of the new jobs have been in the service side of the economy; manufacturing employment is down 165,000 since March.

“What it means is the economy is weaker than we had previously thought,” said Elliott Platt, a senior vice president at Donaldson, Lufkin & Jenrette Securities Corp. “We’re not in a recession yet, but we’re perilously close in this quarter and probably going to be perilously close in the first quarter next year.”

Indeed, chief economist Allen Sinai at Boston Co. Economic Advisers said the economy might already be in recession and at best was “near and certainly headed” for one.

They and others predicted the Fed will relax its credit policy, but not all analysts shared that view.

“The economy is kind of moving along in second gear,” said Michael Evans, head of a Washington forecasting firm. “It’s not very weak, and it’s not very strong. I don’t think these numbers suggest further easing.”

The unemployment rate has not been 5.4% since January.

The Labor Department said the huge revision of the October job-growth figure stemmed from overestimating the number of teaching and other school jobs added this fall. That revision contributed to the reported decline in the number of local government jobs last month.

Elsewhere in the service sector, which has been carrying the economy, wholesale and retail trade posted gains of 18,000 and 33,000 jobs, respectively, health services added 40,000 positions and business services added 13,000 positions.

The department said manufacturing employment was down 27,000 in November--with all but 3,000 of the decline coming in the durable-goods sector. The biggest problem area there is in automobile manufacturing, which lost 15,000 jobs last month after losing 10,000 in October.

Adding to evidence of a severe manufacturing slump, the government said the average factory workweek fell from 40.8 to 40.7 hours and overtime was unchanged at an average of 3.7 hours a week.

Mining and construction reported modest employment gains last month, adding 7,000 and 17,000 positions, respectively.