The final non-farm payroll data under President Barack Obama showed an increase of 156,000 jobs in the month, after rising by a revised figure of 204,000 the month before, according to the US Department of Labor.
Meanwhile, the unemployment rate rose slightly to 4.7 per cent, up from 4.6 per cent in November, while wages swung back into growth of 10 cents, a 0.4 per cent rise after dipping by two cents last month.
The dollar had strengthened ahead of the data and rose sharply, with the euro reaching day lows of €1.0537 against the greenback at the time of publication.
Economists had expected US non-farm payrolls to increase by 178,000 in December, according to a Reuters survey.
The survey’s comprehensive coverage – it covers employees producing about 80 per cent of US GDP – makes it the one of the most important reports for policy makers at the Federal Reserve, who meet on 1 February to decide whether to raise interest rates further.
Kully Samra, Charles Schwab UK managing director, said: “Despite December’s nonfarm payroll numbers missing forecasts, the US economy still has a robust labour market.
"These figures should still be viewed as a justification of the interest rate hike last month, and we continue to expect the FED to raise rates throughout the year," he added.
The consensus of Fed officials points to three rate hikes over the course of 2017, but markets are pricing in a mere two per cent chance of a rate rise at the next meeting, according to CME analysis based on federal fund futures.
In the latest minutes of policy-setting body the Federal Open Market Committee (FOMC) officials noted the “solid pace” of employment growth in non-farm payrolls.
The Fed will also be watching closely for signs that rising employment is adding to wage growth, which could potentially add further inflationary pressure amid an uncertain environment for fiscal policy. Investors have made large bets that President-elect Donald Trump will cause higher inflation through a large fiscal stimulus.
James Hughes, an analyst at GKFX, said: "Despite the miss in the headline grabbing non farm payroll number, the overall jobs report can be considered a strong one with the all-important average earnings jumping from a negative reading last month."
The FOMC predicts further unemployment falls. Minutes from the last meeting said: “The unemployment rate was forecast to edge down gradually, on net, and to continue to run below the staff's estimate of its longer-run natural rate through the end of 2019.”