The U.S. economy added 178,000 jobs in November, and the unemployment rate fell to 4.6 percent, according to a much-anticipated report Friday from the Labor Department.

The report, the last major employment data before the Federal Reserve's December policy meeting, was close to Wall Street expectations of 175,000, though economists surveyed by Reuters had expected the unemployment rate to stay at 4.9 percent.

Wages put a damper on the gains, with the annualized pace of average hourly earnings increases slumping to 2.5 percent.

"This positive jobs report is another indication that the U.S. economy continues to pick up steam," said Tony Bedikian, managing director and head of global markets at Citizens Bank. "We've seen a rally in equity markets, a stronger dollar and upward revisions to GDP as of late. The markets have priced in a Fed tightening later this month and I think today's report supports that view."



The unemployment rate matched the lowest level since August 2007, thanks in some part to a decline in the labor force participation rate to its lowest level since June and still near 40-year lows. A broader measure of joblessness that accounts for the underemployed and discouraged workers also fell, declining from 9.5 percent in October to 9.3 percent in November, the lowest since April 2008.

However, the number of workers counted not in the labor force surged by 446,000 to 95.06 million.

Wall Street was watching the numbers closely as the first indication of jobs market strength since the Nov. 8 presidential election.