The U.S. unemployment rate edged down to the lowest level since February 2009, and President Barack Obama said the U.S. economic recovery was moving in the right direction despite remaining challenges. The U.S. unemployment rate declined to 8.5 percent in December, reported the Labor Department on Friday, fresh evidence that the world\'s largest economy is on a stronger footing. Nonfarm employers added 200,000 jobs in December, with private employers adding 212,000 jobs and governments at all levels cutting 12,000 jobs, showed Labor Department figures. \"Today\'s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression,\" Alan Krueger, chairman of the White House Council of Economic Advisers, said in a statement on Friday. Against the backdrop of slashing government outlays, U.S. governments cut 280,000 jobs in 2011. The total number of unemployed Americans stood at 13.1 million in December, said the Labor Department. Retail trade continued to add jobs in December with a gain of about 28,000, as the sector benefited from the solid retail sales gain in the holiday shopping season. In December, manufacturing employment expanded by 23,000. Even though the labor market recovery has been disappointingly slow, the current job market improvement has produced modest but noticeable gains for the nation\'s unemployed, said Gary Burtless, a senior fellow with the Brookings Institution. However, December also marked the 35th consecutive month of an unemployment rate above eight percent, and the nation needed to take more steps to reduce uncertainty for small businesses, U.S. House Speaker John Boehner said on Friday in a separate statement. The United States was making progress in its economic recovery, as more private sector jobs were created in 2011 than any year since 2005, Obama said during a visit to the new Consumer Financial Protection Bureau. \"We\'ve now added 3.2 million new private sector jobs over the last 22 months -- nearly 2 million jobs last year alone. So after shedding jobs for more than a decade, our manufacturing sector is also adding jobs two years in a row now,\" the president added. In December, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents, or 0.2 percent, to 23.24 dollars. Over the past 12 months, average hourly earnings have increased by 2.1 percent, noted the jobs report. However, the annual hourly earnings increase lagged behind the rise of inflation over the past year, suggesting dwindling purchasing power of average workers. In the past 12 months, the Consumer Price Index (CPI), which tracked inflation at the retail level, increased by 3.4 percent before seasonal adjustment as of November 2011, Labor Department figures revealed. The number of long-term unemployed, or those jobless for 27 weeks or more, was little changed at 5.6 million and accounted for 42.5 percent of the total unemployed, not far below the record high of 45.5 percent in March 2011. The latest job market report capped off 2011 on a positive note, but it would take many years of reports this strong or stronger to bring the labor market back to health, said Heidi Shierholz, an economist with the Washington-based Economic Policy Institute. \"The jobs deficit of the 2008-09 period, defined as the number of jobs lost since the recession started plus the jobs we should have added to keep up with the normal growth in the working-age population, remains well over 10 million, and at December\'s growth rate the United States will not recover its pre-recession unemployment rate until 2019,\" said Shierholz. The White House announced on Friday that Obama was scheduled to meet with members of the President\'s Council on Jobs and Competitiveness on Jan. 17 for discussions on policies to bolster economic growth and job creation. \"We have a responsibility to do even more than just try to recover from this devastating recession and financial crisis,\" Obama stressed. The stubbornly high unemployment rate was believed to be one of the strongest headwinds for his reelection bid.