EDD said 1.8 million Californians were unemployed in December, slightly below the previous month but down by 255,000 since December of 2011. The unemployment rate then was 11.2 percent.
The department said construction, information, and educational and health services fields showed the biggest job gains between November and December.
Still, the department's surveys showed that nonfarm payroll jobs decreased by 17,500 during December, demonstrating the continued volatility in the labor market, said economist Steven Levy of the Center for the Continuing Study of the California Economy.
He said the state has made important gains since a year ago as its economy continues to rebound.
"Looking at the past 12 months California has slightly outpaced the nation in job growth, which is expected to continue in 2013," he said. "While the state benefits from a surge in technology jobs, a rebound in tourism and rising construction levels, California's growth is still tied to the uncertainties in the national economy around fiscal challenges and the slower world economy growth."
Mining and logging, manufacturing, government and other services have continued to see falling job numbers over the last year, losing more than 51,000 jobs, the state report said. Government lost the highest number of jobs, about 31,500 in the last year.
Unemployment rates fell in less than half of U.S. states last month, as steady but slow hiring is making only gradual improvement in the job market.
The Labor Department said Friday that rates fell in 22 states in December and rose in 16. They were unchanged in 12.
The department's monthly report also shows that steady hiring nationwide in the past two years has lowered the unemployment rate in many parts of the country. The rate is now below 7 percent in 25 states. And some of the states hardest hit in the recession have seen solid gains.
Nevada's unemployment rate, the highest in the nation, plummeted 0.6 percentage points last month to 10.2 percent. Rhode Island's rate, also 10.2 percent, fell from 10.4 percent in November.
A year ago, Nevada reported an unemployment rate of 13 percent. Its 2.8 percentage point drop in 2012 was the biggest in the nation.
Much of that decline stems from a smaller labor force. Many of those in Nevada who were out of work have given up looking for jobs or have left the state. People are only counted as unemployed if they are actively looking for work. Nevada's workforce fell nearly 2 percent last year.
But some of the unemployed have found jobs. In the past year, the state has gained nearly 20,000 jobs.
Nationwide, the rate remained at 7.8 percent in December. Employers added 155,000 jobs last month, nearly matching the average of 153,000 in 2012 and 2011. That's just enough to slowly reduce the unemployment rate, which declined 0.7 percentage points nationwide last year.
Employers added jobs in 27 states, the department said, while they cut jobs in 23 states. The job totals come from a survey of employers, while the unemployment rate is calculated from a separate survey of households.
New York and New Jersey reported the biggest job gains last month, likely reflecting a bounce back from Superstorm Sandy, which caused job losses in both states in November. New York gained nearly 9,000 construction jobs, while New Jersey added 4,200.
That's nearly half the 30,000 construction jobs created last month nationwide, the biggest increase in 15 months.
Still, New Jersey now has the nation's fourth-highest unemployment rate, at 9.6 percent. That's down slightly from the previous month but a half-point higher than a year ago.
North Dakota reported the nation's lowest unemployment rate, at 3.2 percent. Nebraska had the second-lowest rate, at 3.7 percent, followed by South Dakota at 4.4 percent.