Nonfarm payrolls increased by 120,000 jobs, the Labor Department said on December 2, and the jobless rate dropped to 8.6 percent, the lowest since March 2009, from 9 percent in October.

It was the biggest monthly decline since January. While part of the decrease was due to people leaving the labor force, the household survey from which the department calculates the unemployment rate also showed solid gains in employment.

Although the gain in the number of jobs created as measured by a survey of employers was relatively modest and most of the hiring was concentrated in the retail sector, the rise in employment topped October's upwardly revised 100,000 increase.

In all, 72,000 new jobs were created in October and September than previously reported.

In forecasts released earlier this month, the US central bank said the jobless rate would likely average 9 percent to 9.1 percent in the fourth quarter. It did not expect it to drop to an 8.5 percent to 8.7 percent range until late next year.