The Labor Department's fresh snapshot of the nation's jobs climate, released Friday, also showed that the unemployment rate dipped from 5 percent in November to 4.9 percent in December, as some people left the labor market for any number of reasons.
The 108,000 gain in payrolls registered in December followed a big pickup of 305,000 jobs added in November, according to revised figures released Friday. That was the most since April 2004 and was even stronger than the 215,000 job gains first estimated for November a month ago.
For all of 2005, the economy added 2 million jobs — a solid amount and about the same as the year before. The unemployment rate averaged 5.1 percent last year, an improvement from the 5.5 percent average registered in 2004.
"We have a sturdy job market," said Mark Zandi, chief economist at Moody's Economy.com. He expects another 2 million jobs to be created this year and that average unemployment rate for all of 2006 will move lower.
On Wall Street, stocks edged higher. The Dow Jones industrials were up 9 points and the Nasdaq gained 7 points in morning trading.
December's gain of 108,000 jobs was about half of what economists were expecting. Before the release of the report, they were forecasting employers to add around 200,000 positions during the month.
Job losses in construction, retail and transportation helped to blunt job gains in manufacturing, professional and business services, education and health services, government and elsewhere.
Economists said that the slower growth in payrolls in December was likely to be temporary and didn't suggest a serious backslide in the labor market.
"There are a lot of cross currents out there ... but overall the report suggests the job market is still doing pretty well," said Carl Tannenbaum, chief economist at LaSalle Bank.
Analysts pointed out that month-to-month job figures can be erratic but that the picture painted over the past year is a good one.
President Bush, whose standing with the public has improved but still remains relatively low, has shifted into a campaign-like mode to shine a spotlight on the economy's good points in speeches around the country, including an appearance in Chicago on Friday.
Employees' average hourly earnings climbed to $16.34 in December up 0.3 percent from November. That increase was a bit larger than the 0.2 percent gain economists were forecasting.
While wage growth is good for workers, a rapid pickup — if sustained — would be worrisome to investors and economists who worry about inflation.
To keep inflation in check, the Federal Reserve is expected to boost short-term rates at its next meeting on Jan. 31, which will mark the last session for chairman Alan Greenspan, who will retire that day after 18-plus years at the helm.
Another rate increase could come at the following meeting on March 28 the first one to be presided over by incoming Fed chief Ben Bernanke. Either way, many economists believe the Fed's nearly two year credit-tightening campaign will be winding down this year.
The report also showed that the average time the unemployed spent searching for work in December was 17.3 weeks, an improvement from the 17.6 weeks in November.
October's payrolls turned out to be a bit weaker — showing an increase of 25,000, versus 44,000 previously reported, according to revised figures released Friday. Still, given that was a month where the lingering effects of the devastating Gulf Coast hurricanes were still being felt, the lackluster performance could be explained.
Katrina struck in late August, with Rita following in late September. Wilma hit in late October. The economy managed to grow solidly despite the destruction of the hurricanes.