The US economy added 252,000 jobs in December, while the unemployment rate fell to 5.6% from 5.8%, according to Labor Department figures.
In addition, figures for the number of jobs created in October and November were both revised upwards.
The jobless rate is now at its lowest since June 2008.
But weak wage growth and low inflation are likely to give the Federal Reserve pause for thought over raising interest rates.
The increase in jobs was higher than expected with the strongest growth in professional and business services, construction, healthcare and food services, according to the data released by the US Labor Department.
However, there was little improvement in December for part-time workers wishing to work more hours, and average hourly earnings fell by 5 cents after rising 6 cents in November.
The fall in the jobless rate was largely due to a drop in the number of people seeking work.
Over the whole of 2014, job creation averaged 246,000 a month.
The figures highlight the contrast between the US economy which continues to pick up pace and that of the eurozone which this week slid into deflation.
Whilst eurozone policymakers are considering expanding their stimulus measures to include government bond-buying, or quantitative easing, the US jobs data will encourage expectations of an interest rate rise later this year.
“This is probably a good enough number to allow the Fed to stay on course in terms of adjusting policy, but it probably won’t cause them to change their timing from mid-year,” said Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York.
Lower oil prices and weak inflation will take the pressure off the Federal Reserve to raise rates soon.