WASHINGTON: US employment growth accelerated last month and the jobless rate dropped to a near three-year low of 8.5 percent, offering the strongest evidence yet the economic recovery was gaining steam.
Non-farm payrolls increased 200,000 in December, the Labor Department said on Friday. It was the biggest rise in three months and beat economists' expectations for a 150,000 gain.
The unemployment rate dropped from a revised 8.7 percent in November to its lowest level since February 2009, a heartening sign for President Barack Obama whose re-election hopes could hinge on the state of the labor market.
"The labor market is healing, but we still have a long way to go to recoup the losses we have endured. We may be close to a tipping point where gains can become more self-feeding," said Diane Swonk, chief economist at Mesirow Financial in Chicago.
A string of better-than-expected US economic data in recent weeks has highlighted a contrast between the recovery in the world's biggest economy and Europe, which is already widely believed to be in recession and probably faces worse to come.
The stronger-than-expected jobs data was over-showed by persistent concerns over the euro zone debt crisis, sending US stocks marginally lower. Prices for US government debt rose, while a broad index of the dollar's value hit a one-year high.
Republican presidential hopefuls have blasted Obama's economic policies as doing more harm than good.
The latest economic signs, however, could offer the president some political protection. Over the course of 2011, the economy added 1.6 million jobs, the most in five years.
Still, employment remains about 6.1 million below its pre-recession level. At December's pace of job growth, it would take about 2-1/2 years to win those jobs back.
Unseasonably mild weather last month accounted for some of the boost to payrolls, fueling hefty gains in construction employment. Courier jobs also raised sharply, a gain the Labor Department pinned on strong online holiday shopping.
Employment growth could pull back in January and the jobless rate could rise as the improving conditions lure Americans who have given up the hunt for work back into the labor market.
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