The long-suffering job market is ending the year better off than it began.

The number of people applying for unemployment benefits each week has dropped by 10 percent since January. The unemployment rate, 8.6 percent in November, is at its lowest level in nearly three years.

Factory output is rising, business owners say that they're more optimistic about hiring and consumer confidence has jumped to its highest level since April. Even the beleaguered housing market is looking slightly better.

Still, 25 million Americans remain out of work or unable to find full-time jobs. Most analysts forecast a stronger economy and job growth in 2012 - and rule out a second recession - but they caution that that could change if Europe's debt crisis worsens or consumers pull back on spending.

Yesterday, the Labor Department said that the number of people applying for unemployment benefits last week rose 15,000 to 381,000. But the four-week average, a less volatile measure, dropped to 375,000 - the lowest level since June 2008.

Economists surveyed predict that the unemployment rate will fall to 8.4 percent by Election Day.

About 7.2 million people are currently receiving unemployment benefits.