The U.S. economy added a more-than-expected 200,000 new jobs in January, according to the Bureau of Labor Statistics, while average hourly earnings rose the most in more than eight years, suggesting a robust labor market that could slowly ignite wage pressure in the world's biggest economy.

The headline unemployment rate held at 4.1% for a third consecutive month, the BLS said, but the addition of 200,000 net new jobs firmly beat Wall Street forecasts of a 180,000 increase and an upwardly revised prior reading of 160,000. Wage increases, however, were the key takeaway from the report, with average hourly earnings rising 0.3% on the month and 2.9% on the year, the fastest pace of gains since 2009, according to BLS data, both of which topped Street forecasts. The December wage increase was also revised higher, to 2.7% from an initial estimate of 2.5%.

Federal Reserve Bank of Minneapolis President Neel Kashari told CNBC television the report was "one of the first signs we're seeing wages pick up ... if that continues it could change the path of interest rates."

Benchmark 10-year U.S. Treasury bond yields reacted in kind, rising 3 basis point to 2.862% in the wake of the release, the highest since August 2014, before paring the advance t 2.834% while the dollar index, which benchmarks the greenback against a basket of six global currencies, rose 0.5% to 89.07.

"The good news is that wages continue to trend higher, signaling a tighter labor market. With higher wages, the expectation is that consumers will continue to spend, which could help solve the inflation conundrum," said Mike Loewengart of E*TRADE. "For investors, this has been one of the more volatile weeks in recent memory. But with solid GDP growth, low unemployment, and momentum on the wages side-albeit slight-there's a lot to be pleased with overall."

The U.S. Federal Reserve has signalled at least three rate hikes this year, saying after Wednesday's policy meeting that "inflation on a 12-month basis is expected to move up this year and to stabilize", and the European Central Bank is widely expected to at least ease the pace of its €2.55 trillion quantitative easing program later this year amid the strongest economic performance for the region in a decade.

The dollar, however, has yet to respond to the so-called "reflation trade", with the greenback holding at near three year lows of 88.82 against a basket of global currencies overnight as investors remain concerned about the partisan battles among U.S. lawmakers and the potential for another government shutdown next week as they squabble over budget allocations and immigration rules.