UPDATE 1-Mexico Dec unemployment rate falls to 4.94 pct

Fri Jan 21, 2011 9:23am EST

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* Jobless rate falls more than expected in December

* Reading points to more solid economic recovery

MEXICO CITY Jan 21 (Reuters) - Mexico's unemployment rate fell more than expected in December, dropping to 4.94 percent in a sign that an economic recovery is gaining traction, data from the national statistics agency showed on Friday.

The jobless rate remains well above pre-recession levels, and appears to have so far restrained an uptick in private spending.

However, industrial production appears to have closed last year at a good clip due to strong U.S. demand, and analysts have been raising forecasts for 2011 economic growth since December.

Later in the day, Mexico's central bank is expected to keep interest rates low later to keep support in place for the economy, which policymakers say is still growing too weakly to fuel inflation. [ID:nMEX003963]

Economists in a Reuters poll had predicted the jobless rate MXUNR=ECI would fall to 5.0 percent. The reading was 5.28 percent in November.

The seasonally adjusted unemployment rate MXUNEM=ECI fell to 5.55 percent in December from a downwardly-revised reading of 5.58 percent a month earlier. (Reporting by Jason Lange and Michael O'Boyle, Editing by Chizu Nomiyama)

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