US unemployment fell for the fourth straight month in December and jobs creation picked up, but economists warned that Europe's debt crisis and a rise in oil prices could yet scuttle the recovery.
In its keenly awaited monthly jobs report Friday, the Labor Department said the unemployment rate slipped to 8.5 percent as 200,000 jobs were added last month.
The jobless rate was the lowest since February 2009, the month after President Barack Obama took office amid the worst US recession in decades.
As recently as August the rate stood at 9.1 percent, and economists cheered the new numbers as evidence that economic growth, feeble throughout much of 2011, was gaining traction.
"This is the best possible type of report, as job creation in December was strong and the unemployment rate fell," said Jason Schenker at Prestige Economics.
"This report provides further justification for continued modest optimism about the US economy in 2012," he said.
Obama, whose political future could hang on how bad unemployment is by the time of November's presidential election, welcomed the news.
"The economy is moving in the right direction. We are creating jobs," he said, while urging Congress to keep supporting stimulus programs for the economy.
The Democratic president has backed government investment to generate more jobs, while opposition Republicans have resisted, arguing that government spending has been holding back private hiring.
A total of 1.6 million jobs were added over the past 12 months, which Obama noted was more than in any year since 2005 but that "a lot" of people were still suffering.
"After losing eight million jobs in the recession, obviously we have a lot more work to do."
The report was stronger than generally expected. Analysts on average had forecast a rise in the jobless rate and weaker job gains of 150,000
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