FORTUNE – The state of the U.S. job market ended 2011 on a high note, according to figures released today by the Labor Department. The U.S. added 200,000 new jobs last month, helping bring the unemployment rate down to a three-year low of 8.5% from a revised 8.7% in November. December’s gains mark the sixth consecutive month the economy added jobs. What’s more, it’s above the 125,000 jobs a month many economists believe is needed in the U.S. to keep up with population growth.
But while this is encouraging, the number of jobs created in December is perhaps the best we can hope for entering 2012, a fact that might explain why markets today seem less than convinced that the sluggish economy has fundamentally turned around. In mid-day trading, both the S&P 500 and the Dow Jones Industrials were down slightly, while the Nasdaq posted a small gain.
Here’s why investors aren’t celebrating:
First, a big portion of the jobs added in December reflect the holiday season and mild weather, according to Capital Economics US chief economist Paul Ashworth. In a report, he points out that 42,000 of the job gains were in the couriers and messengers sector linked to online holiday shopping. So it’s reasonable to presume a bigger than normal drop in courier employment come January. What’s more, unseasonably mild weather last month helped explain the 17,000 bump in construction jobs. As Ashworth points, only 127,000 people couldn’t work because of bad weather – well below the December average of 192,000 during the previous five years.
To look at it from a bigger picture, little has really changed. Indeed, the U.S. added 1.6 million jobs in 2011. But we’re still far from restoring employment to pre-recession levels given that the economy lost 8.8 million jobs during the downturn and its aftermath. And two key ailments continue to unnerve investors: Europe’s ongoing debt crisis is still in crisis mode, while the U.S. housing industry has yet to rebound.
As Paul Dales of Capital Economics noted earlier this week, jobs growth may not accelerate by much more. He expects the unemployment rate to hover above 8% throughout 2012. Surely this is better than being stranded above 9% during previous years, but it’s still a long way from a strong economy.
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