The nation's unemployment rate dropped to 9.4 percent last month, its lowest level in 19 months. That was because more people found jobs, but also because some people gave up on their job searches.
The Labor Department says employers added 103,000 jobs in December, an improvement from November's revised total of 71,000 but far below most analysts' expectations.
Private employers added a net total of 113,000 jobs last month. Government shed 10,000.
The drop in the unemployment rate was partly influenced because the government no longer counts people as unemployed when they stop looking for work.
Through all of 2010, the nation added 1.1 million jobs, or an average of 94,000 jobs a month.
Economists expect hiring will ramp up this year, with some predicting double last year's total of jobs or more. A tax cut package enacted last month should boost consumer and business spending.
More people were hired in previous months than the government first estimated. The economy added 210,000 jobs in October, above the previous figure of 172,000. November's total was revised up from 39,000.
Fewer people said they were out of work last month. The number of unemployed fell by more than 500,000 to just under 14.5 million.
Still, the unemployment rate has topped 9 percent for 20 months, the longest such streak on record. And even with last year's job gains, the unemployment rate fell only from 9.7 percent to 9.4 percent.
The economy needs to generate about 125,000 jobs a month just to keep up with population growth and prevent the unemployment rate from rising. More than double that amount is needed to reduce the rate.