Official figures show that the US economy created more jobs than expected in January. 243,000 jobs were added, the biggest increase since April last year.
The country's unemployment rate also dropped to a near three-year low of 8.3%, indicating that growth in the final quarter of last year carried on into early 2012. The figures sent stock markets higher.
Economists had expected a gain of only around 150,000 and a jobless rate of 8.5%. The rate has dropped 0.8 percentage points since August.
Job gains last month were widespread, with even the transport and warehousing sector showing increases. The tenor of the report was further strengthened by revisions to November and December data, which showed 60,000 more jobs created than previously reported.
In addition, average hourly earnings rose four cents, which should help to support spending. The report suggested that expectations of a slowdown in US economic growth in the first quarter were not yet impacting on companies' hiring decisions.
Employment in the private sector surged 257,000 - the largest gain since April. Government payrolls fell 14,000, the least amount since September.
Mild winter weather boosted construction employment last month, which added 21,000 after a 31,000 increase in December. Manufacturing surged 50,000, the largest rise in a year, after rising 32,000 in December. That contributed to the goods-producing sector posting 81,000 jobs last month, the most since January 2006. Retail employment rose 10,500 after gaining 6,200 in December.
Service sector growth stronger than expected
There was more good news for the US economy from a report which showed that the pace of growth in the US services sector unexpectedly accelerated in January to its highest level in nearly a year.
The Institute for Supply Management said its services index rose to 56.8 last month from a revised 53 in December. It was the highest level since February 2011.
Economists had expected the index to hold steady at 53. A reading above 50 indicates expansion in the sector.
Cautious optimism on US economy
The US economy grew at a 2.8% annual rate in the final three months of 2011, quickening from 1.8% in the third quarter. However, the rebuilding of stocks by businesses accounted for two-thirds of the rise, setting the US economy up for a slower growth pace this quarter. Growth is also expected to moderate as the European debt crisis, which has already pushed some economies in the region into recession, takes an edge off US exports.
Still, there are signs that the economy continues to have momentum. Car sales were buoyant in January, factory activity hit a seven-month high and the four-week average of new jobless claims fell through the month.
While job growth has quickened there are no jobs for three out of every four unemployed people and 19.3 million Americans are either out of work or underemployed.
But there is reason for cautious optimism. The unemployment rate has declined for five straight months, partly because of unemployed workers giving up the hunt for a job and people actually finding work.
A broad measure of unemployment, which includes people who want to work but have stopped looking and those working only part time but who want more work, slipped to 15.1% in January from 15.2% in December.
