Jobs growth in the US remained strong last month even as the economy wrestled with the impact of fast-rising prices.

Employers added 223,000 positions in December, pushing the jobless rate down to 3.5%, from 3.6% in November.

The resilience of the labour market has raised hopes that the world's largest economy will avoid a severe economic downturn this year.

The US central bank is raising borrowing costs to try to cool the economy and ease the price pressures. But hiring has held up, despite the weight of higher interest rates.

Bars and restaurants, health care firms and construction businesses helped to drive the gains last month.

Average hourly earnings rose by 4.6% from last year. That was a slower pace than in November, in what analysts said was a positive sign for the fight against inflation.

The December job growth, though a decent gain, amounted to the lowest monthly increase in two years. The unemployment rate fell to 3.5%, matching a 53-year low, the Labor Department said Friday.

Consumers barely increased their spending in November, held down by modest holiday shopping. And manufacturing activity contracted in December for a second straight month, with new orders and production both shrinking.

The housing market, an important economic bellwether, has taken a severe hit from the Fed’s rate hikes, which have more than doubled mortgage rates in the past year. Home sales have plummeted for the past 10 months.
-BBC/AP