The Labor Department said Friday that employers cut 85,000 jobs last month, worse than the 8,000 drop analysts expected.
A sharp drop in the labor force, a sign more of the jobless are giving up on their search for work, kept the unemployment rate at the same rate as in November. Once people stop looking for jobs, they are no longer counted among the unemployed.
When discouraged workers and part-time workers who would prefer full-time jobs are included, the so-called "underemployment" rate in December rose to 17.3 percent, from 17.2 percent in October. That's just below a revised figure of 17.4 percent in October, the highest on records dating from 1994.
Revisions to the previous two months' data showed the economy actually generated 4,000 jobs in November, the first gain in nearly two years. But the revisions showed it also lost 16,000 more jobs than previously estimated in October.
The report caps a disastrous year for U.S. workers. Employers cut 4.2 million jobs in 2009, and the unemployment rate averaged 9.3 percent. That's compared to an average of 5.8 percent in 2008 and 4.6 percent in 2007. The economy has lost more than 8 million jobs since the recession began in December 2007.
Most economists worry that 2010 won't be much better. Federal Reserve officials, in a meeting last month, anticipated that unemployment will decline "only gradually," according to minutes of the meeting released earlier this week. The Fed and most private economists expect the unemployment rate will remain above 9 percent through the end of this year.
If jobs remain scarce, consumer confidence and spending could flag, potentially slowing the economic recovery. Many analysts estimate the economy grew by 4 percent or more at an annual rate in the October-December quarter, after 2.2 percent growth in the third quarter.
But the economy will need to grow faster than that to bring down the unemployment rate. And the concern is that much of the recovery stems from temporary factors, such as government stimulus efforts and businesses rebuilding inventories.
Other figures from the government's report were mixed: the average work week remained unchanged at 33.2 hours, near October's record low of 33. Most economists hoped that would increase, as employers are likely to add hours for their current employees before hiring new workers.
On the positive side, there was a big jump in temporary hiring of 46,500, bringing the total increase in temporary employment to 166,000 since July. Companies also customarily bring on temporary workers before adding permanent ones.
Job losses remained widespread: manufacturing lost 27,000 jobs and construction shed 53,000, while retailers, the leisure and hospitality industries and government also cut workers.
