U.S. job creation will accelerate a bit this year as a moderate economic recovery continues, the White House said on Friday, but it faces a key risk from the debt crisis in Europe.

Stronger job growth may boost President Barack Obama as he seeks re-election in November, but his annual economic report warned that the road ahead could be bumpy.

Only a prolonged and robust expansion can eliminate the large jobs deficit that opened up during the recession, and the economy as a whole has considerable room to grow, the report said.

The Eurozone's ongoing debt crisis also represented a potential threat to the U.S. recovery, and the White House warned significant risks remain despite steps to tackle the crisis taken by European governments.

Europe's leaders voiced optimism on Friday that Greece would secure a new rescue deal worth 130 billion euros ($171 billion), but they cautioned that urgent work was still needed.

Still, recent better-than-expected labor-market data have encouraged the White House to upgrade its forecasts for hiring.

Its latest estimate -- released after news that the most widely reported U.S. unemployment rate fell in January to 8.3 percent -- projected average growth in U.S. payrolls of 167,000 a month this year. At this pace, two million jobs will be created during 2012, an increase from 1.8 million in 2011, the report said.

The actual unemployment rate in 2012 was forecast at 8.9 percent, but the White House has already said this number is stale and instead highlighted private-sector estimates that the jobless rate could average between 8 percent and 8.6 percent this year.

No Unemployment Forecast

No U.S. president since World War II has won re-election with national unemployment above 7.2 percent -- the level of joblessness when Ronald Reagan secured a second term in 1984 after bringing the rate down from 9.5 percent.

Alan Krueger, chairman of the White House Council of Economic Advisers, declined to spell out the administration's forecast for the unemployment rate this year, as the president campaigns to win a second term in office.

The White House was slammed for predicting in 2009 that Obama's emergency stimulus measures would hold unemployment beneath 8 percent. It subsequently peaked at 10 percent.

The council adjusts its economic forecasts twice a year -- to prepare the president's budget, which was released on Monday, and for an annual midsession review expected in August. Krueger said he would hold to that tradition.

The economy was projected to expand at a 3 percent pace both this year and next year, mirroring the assumptions of the budget.

The White House views exports as an important engine for growth, in part because it expects domestic consumption to steady at the modest expected pace of income growth this year.

Also, government spending will be held on a tight leash to control the deficit, a hot election-year topic as Republicans try to paint the Democrat Obama as a tax-and-spend liberal.

To grow, going forward, the role of exports jumps out at you, Krueger told reporters, noting Obama was on track to meet his goal of doubling U.S. exports by the end of 2014.

Corporate spending was another potential source of demand, with company profits healthy and firms sitting on plenty of money that could be invested in building more plants and purchasing more equipment after several years of hoarding cash flow.

Business investment may be positioned to grow rapidly if demand accelerates because corporations have plenty of internal funds, the report notes.

(Reporting by Alister Bull; Editing by Neil Stempleman and Will Dunham)