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Hiring gained traction in December

Mark Lennihan / AP

Job seekers meet with potential employers at a job fair in New York.

By msnbc.com staff and wires

U.S. employment grew solidly last month, continuing a strengthening trend in the nation’s job market seen in the second half of 2011.

The economy’s payrolls increased by 200,000 in December, the U.S. Labor Department reported Friday. The data surpassed economists’ expectations and mark a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hasn't happened since April 2006.

Adding to the upbeat tone of the report was news that the nation’s jobless rate slipped to 8.5 percent in December -- its lowest level since February 2009 and down from a revised 8.7 percent reading for the previous month. The rate has dropped for four straight months.

However, the payrolls count for October and November was revised to show 8,000 fewer jobs created than previously reported, taking some edge off the data.

“There is no question that today’s employment report is a positive and there is also no question that the pace of job growth has accelerated of late,” said Dan Greenhaus, an analyst at BTIG LLC, a brokerage firm.

Expectations for a solid payrolls gain rose Thursday, when the private payrolls agency ADP said its own calculations for hiring gains were much stronger than forecast.

The closely watched employment report will likely cement views that economic growth accelerated in the fourth quarter after a tepid performance in the first nine months of 2011. However, the pace of job creation remains too slow to signal a robust economic recovery is finally under way.

The economy would need even faster job growth over a sustained period to make a noticeable dent in the pool of 24.4 million Americans who remain either out of work or underemployed 2-1/2 years after the end of the 2007-09 recession.

An improvement in the U.S. labor market is crucial for the global economy because American consumer spending accounts for a fifth of the world's economic activity. A recovery in the U.S. would also mitigate the impact of a sharp slowdown expected in Europe this year.

Vote: Do you see signs of improvement in the labor market?

President Obama welcomed the December unemployment data and urged Congress to extend a payroll tax cut until the end of 2012 to help the country's economic recovery maintain its momentum.

"Obviously, we have a lot more work to do," he said during a visit to a consumer financial watchdog to welcome its new director, Richard Cordray, who Obama appointed this week despite opposition from Republicans in the U.S. Senate.

A better job market is a positive sign for Obama, who is bound to face voters with the highest unemployment rate of any sitting president since World War II. Unemployment was 7.8 percent when Obama took office in January 2009.

Still, the level may matter less to his re-election chances if the rate continues to fall. History suggests that presidents' re-election prospects hinge less on the unemployment rate itself than on the rate's direction during the year or two before Election Day.

For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9 percent last year, down from 9.6 percent the previous year.

Economists forecast that the job gains will top 2.1 million this year.

The December jobs report painted a picture of a broadly improving job market. Average hourly pay rose, providing consumers with more income to spend. The average work week lengthened, a sign that business is picking up and companies may soon need more workers.

And hiring increased across most major industries. Manufacturing added 23,000 jobs, as did the health care industry. Transportation and warehousing added 50,000 jobs. Retailers added 28,000 jobs. Even the beleaguered construction industry added 17,000 workers.

Economists cautioned that some of the gains reflected temporary hiring for the holiday season. The government adjusts the figures to account for those seasonal factors, but doesn't always fully account for them.

The gains in transportation and warehousing, for example, reflected a strong increase in hiring for couriers and messengers. That could stem from a big jump in online shopping over the holidays, the department said.

The Associated Press and Reuters contributed to this report.

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