The nation's unemployment rate surged by five percent in December, as cutbacks by large corporations reversed modest employment gains at smaller firms, recent reports show.

U.S. private-sector employers added a net 18,000 jobs last month, down from 115,000 in November, the Labor Department reported Friday. The gains, which were led by professional and technical services firms, health care providers, and other service-sector businesses, were offset by job cuts at construction and manufacturing firms. All told, unemployment rose by 474,000 to 7.7 million, the sharpest increase in two years.

According to a separate report by Roseland, N.J.-based payroll firm ADP, small businesses accounted for the bulk of last month's employment gains.

"In eleven of the past twelve months, small businesses added more jobs than medium- and large-size businesses combined," said Joel Prakken, the chairman of Macroeconomic Advisers, a research group that prepares the ADP report.