Payrolls increased more than forecast in February and the jobless rate unexpectedly fell to a five-year low of 7.7%, a sign U.S. employers were undaunted by the budget impasse in Washington.
Employment rose 236,000 last month after a revised 119,000 gain in January that was smaller than first estimated, Labor Department figures showed today in Washington. The median forecast of 90 economists surveyed by Bloomberg projected an advance of 165,000. The jobless rate dropped from 7.9%. Hiring in construction jumped by the most in almost six years.
Stock-index futures, the dollar and Treasury yields all rose on signs the world’s largest economy is gaining strength in the face of federal budget cuts and higher payroll taxes. Automakers and home-improvement retailers are among those announcing plans to take on more staff as Federal Reserve policy makers debate how much longer to maintain record stimulus to boost employment.
“The labor market looks pretty solid,” said Drew Matus, deputy U.S. chief economist at UBS Securities LLC in Stamford, Connecticut, who correctly forecast the unemployment rate. “In most areas, there was a pretty healthy rate of improvement. The Fed is going to be happy to see these numbers. It would suggest to them that they’re doing exactly the right thing by stimulating the economy.”
In addition to the pickup in construction employment, payrolls climbed at retailers, professional and business services such as temporary help firms, and at health care providers.
The contract on the Standard & Poor’s 500 Index expiring in March rose 0.4% to 1,543.6 at 9 a.m. in New York. Treasuries declined, pushing up the yield on the benchmark 10- year note to 2.08% from 2% late yesterday.
Employers also boosted hours worked, and pay picked up for American workers. Average hourly earnings rose 0.2% to $23.82 in February. The average work week for all employees increased six minutes to 34.5 hours.
Payroll projections ranged from gains of 121,000 to 260,000 following an initially reported 157,000 increase in January, according to the Bloomberg survey. Revisions subtracted a total of 15,000 jobs to the employment count in December and January.
Private payrolls, which don’t include jobs at government agencies, rose by 246,000 in February after a revised gain of 140,000 the previous month. Economists forecast they would grow 170,000 following an initially reported 166,000 gain in January.