Morning Market Roundup: Unemployment Rate, Shrinking Military, BMW No. 1

Here’s what’s important in the financial world this morning:

Unemployment: The Labor Department said Friday that employers added a net 200,000 jobs last month and the unemployment rate fell to 8.5 percent. For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9 percent last year, down from 9.6 percent the previous year.

Economists cautioned that some of the gains reflected temporary hiring for the holiday season. The government adjusts the figures to account for those seasonal factors, but doesn't always fully account for them.

The gains in transportation and warehousing, for example, reflected a strong increase in hiring for couriers and messengers. That could stem from a big jump in online shopping over the holidays, the department said.

However, there are a few things that should be noted. Ed Morrissey of Hotair explains:

Even though the rate of initial weekly jobless claims has declined over the last few weeks, there has been an increase of 150,000 people unemployed for five weeks or less. The numbers declined slightly in all other time frames, but that’s something to watch. The civilian population participation rate hasn’t changed at all from the 64.0% of last month, which remains the lowest level since the Reagan years and which keeps the jobless rate artificially low.  The civilian labor force — all the employed and all those seeking employment — actually declined by 50,000 people since November.  However, the U-6 measure of “real” unemployment dropped from 15.6% in November to 15.2% in December, which is the lowest in three years.

So what's the bottom line?

"It’s a pretty good but not spectacular result," Morrissey writes of the newly-released figures. "In order to gain jobs, we have to net more than 125,000 jobs added each month. At this rate, it would take 40 months to add 3 million jobs over and above population growth. I’d rather go in that direction than the opposite, but we need a lot more robust job creation than this to get people back to work."

We’re #1: Can Audi pass BMW, which passed Mercedes? The ongoing race for the prime position among luxury car companies in the U.S. was won by BMW in 2011. It sold 247,907 cars and light trucks. It is an especially impressive accomplishment because the domestic brands Lincoln and Cadillac were favored by Americans for so many years. And BMWs tend to be priced well above U.S. competitor luxury cars and rival products from Japanese nameplates Lexus, Infiniti and Acura. Audi has made gains in the U.S. with its fleet of all-wheel-drive cars. And it claims it sold more vehicles worldwide than Mercedes and BMW did in 2011. It has not done nearly as well in America, and BMW’s lead is close to insurmountable. But that is what was said of Cadillac and Lincoln a generation ago.

Samsung Sales Surge: Samsung proved that it is the only real challenger to Apple in the smartphone industry — for now. Its estimated earnings were $4.5 billion for the fourth quarter, up nearly 40 percent from the same period a year ago. It now has passed Apple in total global iPhone sales, and it has a legitimate chance to pass Nokia, the top handset maker in the world. Samsung has shown it is the master of the design of Google Android-based phones and tablets, with its Galaxy series capturing much of the top of the market.

Our Shrinking Military: Yesterday was a grim one for U.S. defense contractors such as Lockheed Martin and Boeing. President Obama announced that military spending would be cut by $487 billion during the next 10 years. The administration’s plan is to shrink the U.S. fighting force to a level at which it can no longer fight two large land wars. The focus of defense activity will move toward Asia and the ongoing threat of terrorism. That means fewer large arms systems will be part of the Pentagon’s future plans.

IMF GDP Forecast: International Monetary Fund chief Lagarde said the agency would cut its forecast for global GDP growth in 2012. She indicated the prime reason for the cut was the sharp slowdown in the economies in Europe. Like most experts, Lagarde believes that a recession on one continent will curtail growth on others. America, Japan and China cannot defy the gravity of low demand. The IMF, she said, will drop its forecast for worldwide expansion to below 4 percent.

(24/7 Wall St.)

The Associated Press contributed to this report.