John Gooch files for unemployment at the Georgia Department of Labor office in Dalton, Ga.

Despite job cuts in state and local government, Georgia ended 2011 with the biggest two-month drop in unemployment in nearly 35 years.

The Georgia Department of Labor said today that the state's jobless rate in December declined by one-tenth of a percent to 9.7 percent. Last month was the third consecutive rate of decline in Georgia's seasonally adjusted unemployment rate and left the Peach State with a jobless rate 0.7 percent below the 10.4 percent rate of a year ago.

Georgia Gov. Nathan Deal heralded the decline in the unemployment rate as "great news for our state.

"A decrease in unemployment alongside a number of other positive economic indicators suggests we are heading in the right direction," Deal said in a statement today. "I am fully committed to making Georgia the No. 1 state in the nation in which to do business."

Georgia gained 600 new construction jobs in December, the first time construction has increased employment in December since 2003. Manufacturing grew last month by 400 jobs, the first December growth since 2005. Job gains also came in information services and trade and transportation.

But Georgia's jobless rate still remained well above the U.S. average of 8.5 percent last month. And while jobs grew in December, Georgia still ended 2011 with 14,000 fewer jobs than the state had at the end of the previous year.

The unemployment rate fell in the past year because fewer people were looking for work last month than a year ago, Labor Commissioner Mark Butler said.

In the past year, Georgia's private sector employment grew by 11,300 jobs. But those gains were more than offset by the loss of 20,300 jobs in state and local government as the public sector adjusted to shrinking budgets, Butler said.

The state will release local unemployment figures next week. But preliminary figures showed that metropolitan Dalton continued to lose jobs last month.

The number of workers on the job in metropolitan Dalton last month was down by 4.9 percent, or 3,200 jobs, from December 2010. Dalton had the biggest job loss of any of the state's 14 metro areas, according to the Georgia Department of Labor.