The private sector created 215,000 new jobs in December, much more than the 133,000 jobs economists had expected, and a sharp increase from the previous month, according to the report.
The biggest gains were in the category of trade/transportation/utilities, which grew by 53,000.
Gains in construction hiring were also robust, with 39,000 positions added in December, the U.S. jobs report said.
The healthy showing in this struggling sector was attributed mostly to relief work after Hurricane Sandy. But the slow, yet steady recovery in the housing market also deserves some of the credit.
Medium-sized businesses led job creation, adding 102,000 new jobs. Large businesses followed with 87,000 new jobs.
Bucking the trend was manufacturing; the sector shed 11,000 positions while service providers increased headcount by 187,000, according to data from Moody's Analytics.
The strong showing was a surprise, given months of cautionary words from a bevy of analysts and the Congressional Budget Office.
The analysts and the CBO had warned the fiscal cliff saga would lead to massive job losses and cutbacks in business expansion, hiring and investment.
"The most surprising thing is that despite all the brinkmanship over the fiscal cliff drama and the debate about that, businesses didn't change their hiring plans. They seemed to slow up their investment spending but not on their hiring, so that's very, very encouraging," Mark Zandi, Moody's Analytics chief economist, told CNBC.