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U.S. job growth could be shifting into higher gear

Job seekers wait in line to enter a job fair in San Mateo, Calif.

Marcio Jose Sanchez/Marcio Jose Sanchez/AP

U.S. job creation is shifting into higher gear and may give President Barack Obama the boost he hoped for ahead of his re-election bid this year.

U.S. non-farm employers added 200,000 jobs to payrolls last month, the government said on Friday. That was well above expectations and the gains were distributed broadly across the economy, from manufacturing to transportation and even construction.

Also, the jobless rate posted a surprise fall to 8.5 per cent, its lowest since February 2009.

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Following are some key details from the report:

* The gain in payrolls, which is drawn from a survey of employers, outpaced the 176,000 increase in employment found by the household survey used by the Labor Department to calculate the unemployment rate. Some economists had speculated that the payrolls data was not capturing all the new jobs being created in the country's recovery from the 2007-2009 recession, pointing to the recent outperformance of the household survey. There might be less reason to doubt the payroll number after the December report.

* The drop in the unemployment rate was only aided a little by workers leaving the work force. Just 50,000 people dropped out, keeping the participation rate, a ratio of the amount of the population in the labour force, steady at 64.0 per cent.

* Job creation is spreading widely into different sectors of the economy. The "diffusion index" for private payrolls rose sharply to 61.2 in December. That's the highest reading since July 2011. A reading above 50 means more industries are increasing employment than decreasing employment.

* The pace of job creation was double that recorded in November, although the government revised slightly downward its estimates over the prior two months. The government raised its estimate for October job growth by 12,000 and lowered its November estimate by 20,000.

* Factories added 23,000 workers to payrolls, which was much more than expected and shows U.S. manufacturers continue to buck a global economic slowdown. Also, retailers added 27,900 workers, transportation and warehousing firms added 50,200 and construction employment gained by 17,000.

* The length of the average work week rose to 34.4 hours, while the aggregate weekly hours index - a measure of the total work effort - climbed 0.5 per cent from a month earlier.

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