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US jobless rate falls to 7.7% as jobs surge

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(Globalpost/GlobalPost)

The February US jobs report delivered an encouraging surprise Friday, with the unemployment rate slipping to a four-year low and jobs growth picking up in the world's largest economy.

The jobless rate fell to 7.7 percent, from 7.9 percent in January, and the US gained a net 236,000 jobs, the Labor Department said.

The unemployment rate was the lowest since December 2008, when it stood at 7.3 percent as the rate was climbing in the depths of the Great Recession.

The numbers were much better than analysts expected. The average estimate was for the jobless rate to stay stuck at 7.9 percent for the second month in a row and additional jobs to total only 165,000.

But the January jobs growth number was revised down to 119,000 jobs from an initial estimate of 157,000.

"The data add to evidence that momentum in the labor market has strengthened further," said Jim O'Sullivan, chief US economist at High Frequency Economics.

"Even without any further acceleration, the trend in job growth has been strong enough to keep unemployment coming down."

The welcome news lifted the dollar and sent stock markets higher, pushing the blue-chip Dow Jones Industrial Average to new all-time highs after three straight days of record-breaking closes.

The dollar immediately gained more than one cent against the euro, trading at around $1.2980 to the eurozone currency, and jumped to 125.0 yen.

The private sector last month once again drove jobs growth, adding 246,000 posts, led by gains in professional and business services, construction and health care.

The government shed 10,000 jobs, continuing cutbacks that could deepen after the March 1 launch of drastic "sequester" spending cuts aimed at reducing the government's deficit and debt due to a budget impasse in Congress.

The $85 billion in sequester cuts required over the next seven months require government agencies to reduce temporary hiring and contracting, and that could begin showing up in March's employment numbers.

The White House said the February report provided fresh evidence that the recovery that began in mid-2009 "is gaining traction," but warned that the budget impasse with Republicans could derail it.

"The administration continues to urge Congress to move toward a sustainable Federal budget in a responsible way that balances tax loophole closing, entitlement reform, and sensible spending cuts," said Alan Krueger, head of President Barack Obama's economic team.

The Republican point man on budget negotiations, House of Representatives Speaker John Boehner, said the jobs growth was "positive news" but criticized the White House's stimulus measures, saying "our spending-driven deficit threatens our economy."

Details behind the headline numbers showed persistent sluggishness in the labor market.

The jobless rate fell as 130,000 people dropped out of the labor force. The labor force participation rate eased to 63.5 percent from 63.6 percent.

Total employment climbed in the three months to February by an average of 191,000 jobs a month, well below the average of 250,000 economists say is needed to significantly lower the jobless rate.

The number of people unemployed edged lower, to 12.0 million, but the number of the long-term unemployed -- people without jobs for at least 27 weeks -- was essentially unchanged at 4.8 million, or two out of every five people without jobs.

Chris Low of FTN Financial noted the drop in the labor force would raise concern for the Federal Reserve, which has promised to continue its asset-purchase program, or quantitative easing, until unemployment substantially improved.

"The silver lining here is that the Fed is not likely to be swayed from continuing QE by the report," Low said.

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http://www.globalpost.com/dispatch/news/afp/130308/us-jobless-rate-falls-77-jobs-surge-0