The rate of unemployment in the US fell for the fourth straight month in Decemberm, while job creation also had a boost.
The Labor Department said that the unemployment rate has fallen to 8.5% after 200,000 jobs were added.
It is the lowest level of joblessness since February 2009, the month after President Barack Obama took office amid the worst US recession in decades.
Obama, whose political future could hang on how bad unemployment is by the time of November's presidential election, welcomed the news.
However economists are warning that Europe's debt crisis and a rise in oil prices could scuttle the recovery.