NEW YORK ( TheStreet) -- Employers shed more jobs than expected in December, according to a government assessment released Friday, indicating that the labor market continues to struggle heading into the new year.

The highly anticipated report from the Labor Department showed that a seasonally adjusted 85,000 jobs were lost last month. The figure came in well below a median forecast calling for no change, according to a survey of analysts from Reuters, though estimates varied widely ahead of the release.

But the December slump followed an upwardly revised November pace showing the first positive payroll gains in nearly two years. The government reported that 4,000 jobs were added after originally saying that 11,000 positions were lost. But October revisions showed worsening losses, declining by 127,000 after reporting 111,000 jobs shed.

The nation's unemployment rate remained unchanged at 10% during December, though the same Reuters survey called for the rate to edge higher to 10.1%.

"It's a little disappointing, to be sure, but the unemployment rate held steady and we did see the revisions in November," said Peter Cardillo, chief market economist at Avalon Partners, who had expected jobs to be added in December. "Don't get me wrong, though. It was disappointing, but it still doesn't change the trend of the recovery coming in."

Average workweek hours also remained unchanged at 33.2, while hourly earnings ticked higher by 0.2%.

Many analysts had anticipated improving numbers in December after some recent indicators hinted at a swifter recovery. Analysts mentioned that initial claims data decreased significantly since the spring, buoying hopes for a robust jobs recovery. Some had even called for a significantly positive print in the month, with one analyst surveyed by Reuters forecasting that 100,000 jobs would be added.

But the report revealed continued weakness on several fronts last month. The number of discouraged workers surged to 929,000 after adding another 287,000. Around 661,000 people dropped out of the workforce. The number of long-term unemployed, or those who have been out of work for over six months, also rose to 6.1 million. The manufacturing sector shed 27,000 jobs during the month, while employers in the construction industry cut another 53,000.

And this week alone, reports discussed cuts at Alcoa ( AA and Lockheed Martin ( LMT.

On a brighter note, temporary help services added 47,000 positions, while health care employment rose by 22,000.

Stocks opened lower in the wake of the report. The Dow Jones Industrial Average was down by 0.4%, while the S&P 500 and Nasdaq were sliding by 0.4% and 0.3%, respectively.

--Written by Sung Moss in New York