(Bloomberg News) Employment climbed more than forecast in January and the U.S. jobless rate unexpectedly fell to the lowest in three years, casting doubt on the Federal Reserve's pledge to keep interest rates low until late 2014.

The 243,000 increase in payrolls was the most since April and exceeded all forecasts in a Bloomberg News survey, Labor Department figures showed in Washington. The unemployment rate dropped to 8.3 percent, the lowest since February 2009.

Stocks and bond yields jumped as the report fueled optimism the economy is weathering the European debt crisis. The data may boost President Barack Obama's re-election bid and come one week after Fed Chairman Ben S. Bernanke said the economy wasn't growing fast enough to push unemployment lower.

"Further Fed stimulus is probably limited at this point," said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. "The drop in the unemployment rate has to be very, very positive from the Fed's point of view."

The Standard & Poor's 500 Index rose 0.9 percent to 1,337.51 at 9:43 a.m. in New York. The yield on the benchmark 10-year Treasury note climbed to 1.91 percent from 1.82 percent late yesterday.

The median projection in the Bloomberg survey called for payrolls to rise by 140,000 after an initially reported 200,000 gain in December. Estimates of the 89 economists ranged from increases of 95,000 to 225,000. Revisions added a total of 60,000 jobs to payrolls in November and December. The Labor Department revised December's gain to 203,000.

Gains in employment were broad-based, including manufacturing, construction, temporary help agencies, accounting firms, restaurants and retailers.

Employment, overtime and hours worked in factories increased as manufacturers, who have been leading the two-year recovery, ramped up production to rebuild inventories and meet global demand for their goods.

Assembly-line workers put in an average 41.9 hours of work each week, the most since January 1998, while overtime hours climbed to the highest since March 2007. Manufacturing payrolls increased by 50,000 in January, the most in a year.

Peoria, Illinois-based Caterpillar Inc., the world's biggest maker of earthmoving equipment, plans to hire more workers this year as it expands facilities, including in Victoria, Texas, and Winston-Salem, North Carolina, Chief Financial Officer Edward Rapp said yesterday.