Unemployment in the US fell to 8.6% in November, its lowest level since March 2009, as private employers continued to add jobs at a healthy pace.
The government's closely watched non-farm payroll figures rose by 120,000 last month. Growth was driven by private companies, which added 140,000 jobs. Cuts in the public sector led to the loss of 20,000 jobs, the US Department of Labor reported on Friday.
The unemployment rate fell to 8.6% in November from 9.0% the previous month. The rate is the lowest since March 2009, when it was also 8.6%.
The drop in unemployment figures is a welcome boost for Barack Obama going into an election year. Recent political history shows that no president has managed to win re-election with unemployment as high as 9%, where it had been stuck.
Obama said on Friday: "Despite some strong headwinds this year, the American economy has now created jobs in the last 21 months in a row.
"We need to keep that growth going."
He also urged Congress to pass the tax holiday beyond December 31, saying: "Now's not the time to slam on the brakes; it's time to step on the gas."
Alan Krueger, chairman of the council of economic advisers, said: "Today's report provides further evidence that the economy is continuing to heal from the worst downturn since the Great Depression. But the pace of improvement is still not fast enough."
The Department of Labor revised its October figure to show a gain of 100,000 from a previously reported 80,000. September's numbers, too, were revised up to 210,000 from 158,000.
Some industries and some groups fared better than others: retail added 50,000 jobs, leisure and hospitality jobs rose by 22,000, and professional and business services saw a gain of 33,000. Healthcare jobs rose 17,000.
Although the White House can take no comfort until a clear downward trend in unemployment is established, it is a bonus for Obama in the short term.
The president can conceivably claim that his policies are working and that failure to extend the tax breaks risks sending the downward trend into reverse.
Krueger said: "It would be a setback for the economy and American families if Congress were to allow extended unemployment benefits to expire at the end of the year."
Republicans in Congress do not want to be seen as blocking the tax breaks, but at the same time do not want to support increased spending. Reflecting the confusion, the Senate on Thursday night blocked both a Democratic and Republican tax plan, with many Republicans voting to kill off their own party leadership's proposals.
Negotiations are underway between Democratic and Republican leaders in Congress to find a compromise that will allow the tax breaks to continue.
The House speaker, John Boehner, who on Thursday for the first time came out in support of extending the tax breaks, welcomed the unemployment drop, but maintained the figure was still too high.
"As you may remember, the Obama administration promised unemployment would stay below 8% if its 'stimulus' was enacted. That promise has gone unfulfilled," Boehner said.
One of the leading presidential candidates, Mitt Romney, told Fox: "It's very good news, obviously, going into the holiday season. People are shopping again. It's very good news that the unemployment rate is down. People are going back to work.
"But look: overall, the president's record on the economy – it's been miserable."
Ken Goldstein, economist at the Conference Board in New York, said the figures were encouraging but that the recovery remained fragile.
"We are not near levels that economists would call robust growth. There's a chance we could be there by this time next year," he said.
Goldstein said the figures added further evidence that younger men were finally finding jobs, but said the numbers for long-term unemployed remained stubbornly high at 6 million.
"This is good news on unemployment. Consumer confidence has been rising as well since the summer, but I think the lack of wage growth could put a damper on recovery," he said.
The unemployment rate for adult men fell by 0.5% to 8.3% in November. The jobless rate for whites (7.6%) also declined, while the rates for adult women (7.8%), teenagers (23.7%), black people (15.5%), and Hispanics (11.4%) showed little or no change. The jobless rate for Asians was 6.5%.
The number of people employed part-time for economic reasons – sometimes referred to as involuntary part-time workers – dropped by 378,000 over the month to 8.5 million.
Friday's report also showed Americans' hourly earnings declined by 2¢ to $23.18 in November. Wages are up by 1.8% over the past 12 months, below overall inflation.
