In January, the economy created jobs at the fastest pace in nine months and the unemployment rate dropped to a near three-year low of 8.3 percent to offer some comfort measures for President Barack Obama who faces re-election in November.

The Labor Department said nonfarm payrolls jumped 243,000, as factory jobs grew by the most in a year. The overall employment gain was the largest since April and clearly outpaced expectations of economists for a rise of only 150,000. The report indicated to underlying strength in the economy, despite expectations that growth will slow in the first quarter.

"It's certainly supportive of the U.S. recovery and suggests that momentum is gathering pace," said Brian Dolan, chief market strategist at FOREX.com in Bedminster, New York.

The United States dollar rose against the yen and U.S. Treasury debt prices fell sharply on the report, and stock index futures surged.

The Federal Reserve was mulling further purchases for speeding up the recovery, said Chairman Ben Bernanke.

"Certainly the Fed will welcome it but they remain worried about other areas of the economy, namely housing. This should not change its view on the economy," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York.

After gaining 6,200 in December, retail employment rose 10,500 and temporary help services jumped 20,100 after rising 8,300.