WASHINGTON — The government's surprisingly bullish report yesterday showing strong employment and wage growth, while good news for workers, revived concerns about inflation and dashed hopes of a quick Federal Reserve interest-rate cut.

The Labor Department said employers added a net 167,000 payroll jobs in December, the most since September and substantially more than the 110,000 expected in the consensus forecast of private economists. It was enough to hold the unemployment rate steady at a low 4.5 percent.

Also, wages rose faster than inflation, continuing a departure from earlier in the current four-year-old cycle of employment growth. Average hourly earnings of production workers jumped to $17.04, an increase of 8 cents, or 0.5 percent, from the previous month.

For all of 2006, average weekly wages climbed 4.5 percent, more than enough to keep pace with price increases of about 2 percent during that period. The last 12-month period when weekly wages rose that much ended in February 1998.

But stocks fell and bond yields rose as investors figured the Fed, on guard against inflation, would not risk an interest-rate cut that could stimulate economic activity and feed inflation. Investors had been hoping for a rate cut possibly as early as March. The central bank's next rate-setting meeting is Jan. 30-31.

The report also illustrated the split economy, with strong job growth in services but slumping hiring in manufacturing.

Nigel Gault, U.S. economist for research firm Global Insight, called the report "rock-solid" but acknowledged its negative implications for interest rates.

"A first-quarter rate cut is now out of the question, and the odds of a second-quarter cut are receding," he said.

Mark Zandi, chief economist for Moody's Economy.com, said jobs and wages were growing too fast for their own good. He warned that higher wages could induce companies to raise prices, which could lead workers to demand higher wages — an inflationary wage-price spiral.

Zandi predicted that job growth would slow, especially if cold weather settles in over the Northeast and depresses the construction industry.

For all of 2006, the Labor Department report showed, the economy generated not quite 2 million jobs, an unexceptional pace for this stage of an economic expansion. But the unemployment rate, 4.9 percent at the end of 2005, fell by 0.4 percentage points to a level that Zandi said was lower than the economy could sustain over the long run.

Job creation for November and October were revised upward by a combined 29,000 jobs, with 154,000 positions added in November and 86,000 in October, the Labor Department said.

Sectors adding jobs last month included architectural and engineering outfits, hospitals and doctors' offices, banks, computer design firms, bars and restaurants, hotels and motels, and schools. But construction, hit by the housing slowdown, lost jobs, as did retailing.

The manufacturing sector also did not share in the December employment gains. It lost another 12,000 jobs, running its total losses to 72,000 over the previous 12 months, while the service sector added nearly 180,000 jobs last month and 1.8 million for the year.