U.S. job growth accelerates, weather cuts into hours worked
WASHINGTON (Reuters) - U.S. job growth rose more than expected in February, easing fears of an abrupt slowdown in economic growth and keeping the Federal Reserve on track to continue reducing its monetary stimulus.
Employers added 175,000 jobs to their payrolls last month after creating 129,000 new positions in January, the Labor Department said on Friday. The unemployment rate, however, rose to 6.7 percent from a five-year low of 6.6 percent.
"This bodes well for the economy since there were massive headwinds against it and there had been some data before this indicating that it wouldn't be so strong," said Adam Sarhan, chief executive at Sarhan Capital in New York.
U.S. stock index futures rose on the data, while prices for U.S. government debt fell. The dollar hit a six-week high against the yen.
Unseasonably cold and snowy winter weather has disrupted economic activity in much of the United States. With snow and ice covering densely populated areas during the week employers were surveyed for February payrolls, another month of sub-par job growth had been expected.
Economists had forecast nonfarm payrolls rising 149,000 and the unemployment rate to hold steady at 6.6 percent.
The harsh weather cut into the length of the average workweek in February, which hit its lowest level since January 2011.
The smaller survey of households from which the unemployment rate is derived showed 6.9 million people with jobs reported they were working part-time because of the weather. That was the highest reading for February since the series started in 1978.
The survey also showed 601,000 people with jobs stayed at home because of the bad weather last month, the highest level for February since 2010.
Nonfarm payrolls averaged about 205,000 new jobs per month in the first 11 months of 2013, but that figure dropped to just 129,000 for December, January and February as the bad weather disrupted economic activity.
Fed officials, including Chair Janet Yellen, have viewed the recent weakness in payrolls, which has been replicated in data such as retail sales, industrial production and home building, as largely weather-related and temporary.
On Thursday, New York Fed President William Dudley reiterated that the economic outlook would have to change significantly for the U.S. central bank to wind down its monthly bond purchases in a series of measured steps this year.
FED TAPER TO CONTINUE
Most economists expect the Fed will announce further cuts in its stimulus at its next meeting on March 18-19.
"Fed tapering will likely continue full steam ahead," said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tennessee.
But the weather is not the only factor behind the lull in activity. Businesses are working through a huge pile of unsold goods accumulated in the second half of 2013, which means they have no incentive to place new orders with manufacturers.
In addition, the expiration of long-term unemployment benefits for more than one million Americans in December as well as cuts to food stamps are also hurting spending.
These factors are, however, temporary and the economy should bounce back in the months ahead.
The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was steady at 63 percent in February.
Job gains last month were almost broad-based, with private sector payrolls rising 162,000 and government adding 13,000 jobs. Manufacturing saw a seventh straight month of gains in employment, matching the 6,000 jobs gained in January.
Construction payrolls, which surprised in January by logging hefty gains, increased by 15,000 last month.
Average hourly earnings rose nine cents in February. The length of the workweek fell to an average of 34.2 hours from 34.3 hours, likely because of the severe weather.