The US economy added 199,000 jobs in December last year, coming lower than market estimates, but the unemployment rate fell to 3.9%, the Department of Labor announced on Friday.
The market had estimated that nonfarm payrolls would see an increase of 400,000 in December.
Job additions for November were revised up by 39,000, from 210,000 to 249,000, according to data by the Bureau of Labor Statistics.
The unemployment rate decreased by 0.3 percentage point to 3.9% in December, beating the market expectation of 4.1%. It stood at 4.2% in November.
US President Joe Biden hailed the new figures as a "historic day" in the nation's economic recovery from the coronavirus pandemic, further noting it is "the sharpest one-year drop in unemployment."
The progress, Biden said, came "years faster than experts said we'd be able to do it, and we have added 6.4 million new jobs since January of last year."
The number of unemployed individuals in the US has also continued to decline, down by 483,000 from the previous month to 6.3 million in December.
Due to COVID-19, more than 22 million people in the world's largest economy lost their jobs in March and April 2020.