Photo: An employee works inside the kitchen at a hotel in New York. Photographer: Jeenah Moon/Bloomberg An employee works inside the kitchen at a hotel in New York. Photographer: Jeenah Moon/Bloomberg

The U.S. labor market burned red hot in January as hiring unexpectedly surged and unemployment fell to a 53-year low, defying recession forecasts and adding pressure on the Federal Reserve to keep raising interest rates.

Non-farm payrolls increased 517,000 last month after an upwardly revised 260,000 gain in December, a Labor Department report showed Friday. The unemployment rate dropped to 3.4 percent, the lowest since May 1969, and average hourly earnings grew at steady clip.

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