U.S Unemployment Rate Reaches 3-Year Low

The U.S. job market strengthened in the second half of 2011 and added 200,000 jobs in December while the unemployment rate fell to 8.5% from a revised 8.7% a month earlier.

December’s biggest growth came in transportation, especially courier services that staffed up for the holidays, and in health care and manufacturing, according to the U.S. Bureau of Labor Statistics.

Economists had forecast that employers added a net 150,000 jobs last month, according to a survey by Factset. They also had predicted that the unemployment rate ticked up to 8.7% from November’s 8.6%, which was the lowest rate since March 2009.

The better-than-expected monthly gain of 212,000 private-sector jobs means American businesses have replaced more than 3 million of the 4.2 million private-sector jobs lost the past 13 months. The private-sector jobs gained since employment bottomed in February 2010, in percentage terms, is the strongest recovery since the rebound after the 1990-92 recession, when U.S. businesses added 4.2 million jobs in the same amount of time by late 1993.

President Obama still could face voters in November with the highest unemployment rate of a sitting president seeking election since World War II. Unemployment was 7.8% when Obama took office in January 2009.

But he could benefit if the unemployment rate continues to dip. History suggests that presidents’ re-election prospects depend less on the unemployment rate itself than on the rate’s direction in the months preceding Election Day.

Information from USA Today contributed to this report.