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US employers unexpectedly cut 85,000 jobs in December, but the unemployment rate held steady at 10%, official figures have shown.

The number of job losses was surprising, particularly after November's figures had been revised.

The US Labor Department had initially estimated that 11,000 jobs were cut in November, but now says that the economy had in fact added 4,000 jobs.

Since the recession began in 2007, 7.2 million jobs have been lost in the US.

In 2009 alone, the economy lost 4.2 million jobs.

Analysts were surprised by the latest data.


For the economy I think the jobs report fits the picture that we have seen of a hesitant recovery
Bruce McCain, Key Private Bank

"I didn't think we'd see something like this until February. I thought we'd have more temporary workers, and the other job indicators we had seemed fairly positive," said Dan Cook from IG Markets.

The construction sector bore the brunt of the job losses last month, shedding 53,000 positions. In manufacturing, 27,000 positions were lost.

However, some sectors added jobs, with professional and business services companies creating 50,000 new positions.

Bruce McCain, chief investment strategist at Key Private Bank, said the latest data showed that getting employment back to normal levels would take some time.

"For the economy, I think the jobs report fits the picture that we have seen of a hesitant recovery," he said.

Jobs challenge

Unemployment levels in the US are at their highest for more than 20 years.

High unemployment is one of the toughest domestic challenges facing Barack Obama's administration.

The president has said that boosting jobs is the best way to tackle the massive US deficit, which stands at more than $1 trillion (£621bn).

In December, Mr Obama outlined a job creation plan, including the proposal to wind up the Troubled Asset Relief Program (Tarp) and use the remaining money from the fund to help lending to small businesses.

Meanwhile, separate data from the Commerce Department showed that US wholesale inventories posted an unexpectedly strong gain in November.

Wholesale inventories rose 1.5%. Economists had predicted a 0.2% drop.