(Updates with report)
* Non-farm payrolls jump 236,000 in February
* Unemployment rate fall to 7.7 percent from 7.9 percent
* Average hourly earnings rise four cents, workweek up
* Report shows underlying strength in the economy
By Lucia Mutikani
WASHINGTON, March 8 (Reuters) - U.S. employers stepped up hiring in February, pushing the unemployment rate to a four year-low and suggesting the economy has enough momentum to withstand the blow from higher taxes and deep government spending cuts.
Nonfarm payrolls surged 236,000 jobs last month, the Labor Department said on Friday, handily beating economists' expectations for a gain of 160,000.
The jobless rate fell to 7.7 percent, the lowest since December 2008, from 7.9 percent in January. The decline reflected gains in employment as well as people leaving the labor force.
Although December and January's employment data was revised to show fewer jobs added than previously reported, details of the report were solid, with construction adding the most jobs since March 2007 and increased hours for all workers.
It was another sign of the economy's fundamental health, which has already propelled the Dow Jones industrial average to record highs. The sturdy gains in February also offered hope the economy would be able to absorb the fiscal austerity.
A 2 percent payroll tax cut ended and tax rates went up for wealthy Americans on Jan. 1. In addition, $85 billion in federal budget cuts that could slice as much as 0.6 percentage point from growth this year started on March 1.
FED STILL IN PLAY
But the pace of gains is still below the roughly 250,000 jobs per month over a sustained period that economists say is needed to significantly reduce unemployment. The Federal Reserve will likely maintain its very accommodative monetary policy.
The U.S. central bank is buying $85 billion in bonds per month and has said it would keep up asset purchases until it sees a substantial improvement in the labor market outlook, a message that Fed Chairman Ben Bernanke drove home in congressional testimony last week.
Since the 2007-09 recession ended, the economy has struggled to grow above a 2 percent annual pace. In the fourth quarter, output barely expanded.
February's employment report showed broad-based gains, with construction the star. The sector added 48,000 jobs and in January construction payrolls increased 25,000.
A decisive turnaround in the housing market and rebuilding on the East Coast after the destruction wrought by Superstorm Sandy in late October is boosting jobs at construction sites.
Manufacturers stepped up hiring in February, although the pace was still well below early last year because of lackluster domestic demand and cooling growth overseas. Factory jobs increased 14,000 last month after rising 12,000 in January.
Retail employment increased 23,700 jobs, rising for an eighth straight month, and defying a recent slowdown in sales.
Healthcare and social assistance saw another month of solid job gains. The same was the case for leisure and hospitality.
Government continued to shed jobs, with payrolls dropping 10,000 last month after falling 21,000 in January.
The sustained steady job gains are lending some stability to wages. Average hourly earnings rose four cents last month.
The length of the average workweek increased to 34.5 hours from 34.4 hours in January. (Reporting By Lucia Mutikani; Editing by Neil Stempleman)