Employers hired more workers in February than in any month since May last year and the unemployment rate fell to a near two-year low, raising hopes the economic recovery has gathered critical momentum.
Nonfarm payrolls increased 192,000, the Labor Department said on Friday, above market expectations for 185,000 jobs. Data for December and January was revised to show 58,000 more jobs created than previously estimated.
The peak of monthly employment last May was when payrolls were being boosted by government hiring for a census.
The unemployment rate dipped to 8.9 percent, the lowest since April 2009, from 9.0 percent in January as more people reported finding work.
We have moved into the expansion phase of the economic cycle and the economy is self-sustaining, said Brian Levitt, an economist at OppenheimerFunds in New York.
Still, February's bounce in employment after payrolls were depressed by extreme weather in January is unlikely to sway the Federal Reserve from its ultra-easy monetary policies.
The jobless rate has dropped 0.9 percentage point since November. The rate is derived from a survey of households, while the job creation figure comes from a separate survey of employers. The household survey showed more people were employed in February.
FED WATCHING JOBLESS RATE
The unemployment rate is being closely watched by the Fed and could well determine the timing of the central bank's first interest rate hike. The Fed, which meets on March 15, has held overnight lending rates near zero since December 2008.
Economists believe the Fed will want to see payroll gains in excess of 200,000 for at least six to nine months and a significant decline in unemployment before starting to withdraw its massive monetary support from the economy.
If we start to add enough jobs, sufficient to lower the unemployment rate, I think the Fed will feel a little more comfortable in easing off the throttle, said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
But right now, the economy is still fragile. There are a number of potholes that we can hit and the Fed is not going to want to act on exiting any time soon.
A surge in crude oil prices above $100 a barrel due to turmoil in the Middle East and North Africa represents a new headwind for the economy.
But Fed Chairman Ben Bernanke this week said higher oil prices were unlikely to steal much from growth or spark broader inflation, as long they are not sustained.
With the jobless rate far from its natural 5-6 percent level and inflation still short of the Fed's target of close to 2 percent, analysts expect the Fed to complete its $600 billion government bond-buying program through June to help the economy.As in previous months, the private sector accounted for all the job gains in February, with an addition of 222,000 positions. That was up from 68,000 in January.
Employment in the private service sector, which pulled back in January, when much of the United States was hit by heavy snowfall, showed solid growth in February, rising 152,000 from 33,000 jobs in January.
Payrolls in the goods-producing industries saw a weather-related bounce of 70,000, with construction increasing 33,000 after shedding 22,000 jobs in January. Manufacturing, a sector that is powering the recovery, added 33,000 jobs.
Government employment fell 30,000, contracting for a fourth straight month, pulled down by state and local governments, which are under heavy budgetary pressures.
The average work week was steady at 34.2 hours. Average hourly earnings rose one cent.