U.S. economic recovery was speeding up with the labor market improving, but the nation needed to take more steps to bolster the faltering recovery, U.S. President Barack Obama said on Friday.

Obama welcomed the latest job market report as good news about the economy, but he cautioned that there were still too many unemployed Americans.

He urged the Congress to make joint efforts to sustain the momentum of the economic recovery including passing the extension of payroll tax cuts for the full year.

The U.S. unemployment rate edged down to 8.3 percent last month from 8.5 percent in Dec. 2011, evidence of an improving job market, the U.S. Labor Department reported on Friday.

"In January, American businesses added another 257,000 jobs. The unemployment rate came down because more people found work. And altogether, we've added 3.7 million new jobs over the last 23 months," he said.

Speaking at a fire station in Arlington, Virginia, Obama warned the Congress not to "muck up" the economic recovery.

"The recovery is speeding up. And we've got to do everything in our power to keep it going," Obama stressed.

"Now is not the time for self-inflicted wounds to our economy. Now is the time for action," he added.

U.S. job market still on long path to recovery

The U.S. labor market teed off the new year with a nice surprise as the country's unemployment rate dropped to a near three-year low of 8.3 percent in January, but experts believe that the jobs growth was insufficient to cure the lingeringly sick labor market in the short run.

U.S. unemployment rate down to 8.3% in Jan.

The US unemployment rate edged down to 8.3 percent last month from 8.5 percent in December 2011, evidence of an improving job market, the Labor Department reported on Friday.

U.S. economic recovery outlook uncertain

The outlook of the US economic recovery remained uncertain, as the recovery was confronted with a set of domestic and external headwinds, US Federal Reserve Chairman Ben Bernanke said on Thursday.