Economy Adds 1.6 million Jobs in 2011; Unemployment Rate Drops to 8.5%

The U.S. Bureau of Labor Statistics (BLS) said Friday that the economy added 200,000 jobs in December and that the national unemployment rate fell to 8.5 percent, from 8.6 percent in November. The unemployment rate is the lowest since March 2009. With the new jobs added in the last month of the year, the total number of new jobs created in 2011 stands at 1.6 million.

The BLS report said that about 212,000 private sector jobs were added in December and that government employment shrunk by around 12,000. The total jobs numbers from October and November were revised to show a net loss of 8,000 jobs between the two months compared to their initial reports.

For the year, the private sector added around 1.9 million jobs, with governments in the U.S. cutting almost 300,000 workers. BLS said that government job cuts in 2011 were most pronounced at the local and state level (excluding education jobs) and at the U.S. Postal Service.

In January 2011, the official unemployment rate stood at 9.1 percent and was largely flat through the first three quarters of the year. It has dropped precipitously since October.

The U-6 measure of labor underutilization – often cited as the “real” unemployment rate because it includes those that are working part time against their wishes and discouraged workers not reflected in the official unemployment rate – dropped to 15.2 percent in December, its lowest reading in nearly three years. The U-6 measure was 16.1 percent in January 2011.

The 133,000 jobs per month average over 2011 isn’t nearly enough to get excited about. But since the ARM industry relies on strong employment for recovery results, is it a good sign that jobs have been trending up recently? And can the economy maintain and even expand on this trend? Let us know in the comments below.