US unemployment fell to a 30-year low in January, according to figures from the Labour Department.

The jobless rate dipped to 4% from 4.1% in December - its lowest level since January 1970.

The rate was in line with Wall Street forecasts.

Some 387,000 jobs were created outside the farm sector, the biggest jump in more than two years and many more than the 255,000 predicted by Wall Street.

The department said the strength of the report was partly due to unseasonably warm weather in the survey period.

The figures highlight the continuing strong demand in the US jobs market which is forcing wages higher.

Average hourly earnings, a closely watched barometer of wage inflation, rose 0.4% to $13.50 from $13.44 in December.

Economists had expected a 0.3% gain.

January saw the biggest rise in nonfarm jobs since a 408,000 jump in September 1997.

Growth was strong across the board, particularly in the service and construction sectors.

The pool of available workers, which Fed chairman Alan Greenspan is watching carefully, shrank 2.1% to 9.94 million from 10.16 million in December.

Warm weather boost

Economists said unseasonably warm weather in the survey period boosted the number of construction jobs available for the time of year. Construction employment added 116,000 jobs in January compared with 22,000 in the previous month.

The Federal Reserve will be monitoring the figures carefully for signs that the economy is overheating.

The bank raised US interest rates by a quarter percentage point on Wednesday but Wall Street expects two or three more rate increases by mid-year to prevent any upward swing in inflation.

Financial markets gave a mixed reaction to the report.

"Overall the data is strong," said Alan Ruskin, research director at 4Cast Inc. in New York. "The three-month trend is very, very solid, pointing toward more Fed (interest rate) tightening in the months ahead."