The US unemployment rate dropped to 8.5 percent in December, the lowest level in nearly three years, as hiring surged more than expected, government data showed Friday.

The Labor Department report confirmed an improving trend in the ailing job market. The department noted that the number of unemployed as well as the jobless rate "continued to trend down in December."

The economy added 200,000 nonfarm jobs last month, the department said, sharply higher than the average analyst estimate of 150,000.

The job gains occurred in transportation and warehousing, retail trade, manufacturing, health care, and mining, the department said.

Most analysts had expected the jobless rate to tick higher to 8.7 percent.

Instead, at 8.5 percent, the jobless rate was the lowest since February 2009, when the United States was battling the worst recession in decades.

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[Photo by Peter Rickman via WisAFLCIO on Flickr, Creative Commons licensed]