NEW YORK - Planned layoffs at U.S. firms fell in December to their lowest level in two years as economic activity began picking up steam, capping off the worst year for corporate job cuts since 2002, a report on Wednesday showed.

Employers announced 45,094 planned job cuts last month, the fewest since December 2007, according to global outplacement consultancy Challenger, Gray & Christmas, Inc.

That marked a 73 percent decline from 12 months ago, when 166,348 job cuts were reported, the report showed.

Over the course of 2009, employers announced plans to cut 1,288,030 jobs, the most since 2002, though the pace of layoffs fell by 56 percent in the second half of the year.

It definitely was a bi-polar year when it came to downsizing, said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

In the first half of 2009, the economy was reeling from the ongoing housing market collapse, bank failures and further deterioration of the country's manufacturing base, he said. Somewhere in the second or third quarter, we turned a corner and now, as we begin 2010, there are promising signs of improvement.

(Reporting by Steven C. Johnson; Editing by Chizu Nomiyama)

Unemployment Christmas