US employment grew solidly for a third straight month in February, a sign the economic recovery was strengthening and in less need of further monetary stimulus from the Federal Reserve.
Employers added 227,000 jobs to their payrolls last month, the Labor Department said today, while the unemployment rate held at a three-year low of 8.3 per cent even as people flooded back into the labor force to hunt for jobs.
Not only was job growth a bit stronger than the 210,000 economists polled by Reuters had expected, but the government said 61,000 more jobs were created in December and January than previously thought.
Non-farm payrolls have now grown by more than 200,000 for three months in a row - bolstering president Barack Obama's chances for re-election. Employment growth has averaged 245,000 a month over the last three months.
"It looks like the economy is starting the year with some positive news for consumers and households," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St Louis.
"The trend is toward better jobs data with companies showing more conviction that the economy is finally gaining strength."
US stocks opened modestly higher on the report, while prices for US treasury debt fell as traders dialed down the prospects for more bond buying by the Fed. The dollar rallied broadly.
"I think we'll begin to ... debate about the Fed exiting its ultra-accommodative policy stance sooner than expected," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
A second report today showed the US trade deficit widened 4 per cent on high oil prices and record imports, which will weigh on domestic growth.
Manufacturing, which in January recorded the largest jobs gain in a year, had another sturdy performance in February and there was also strong demand for temporary help, a potential harbinger of future permanent hiring.
Although the labor market is gaining some muscle, the pace of improvement remains too slow to do much to absorb the 23.5 million Americans who are either out of work or underemployed.
Fed chairman Ben Bernanke last week described the jobs market as "far from normal" and said continued improvement would require stronger demand for US goods and services.
Still, he suggested the outlook would have to deteriorate for the US central bank, which meets next week, to launch another round of bond buying to drive interest rates lower.
The employment report added to the list of data highlighting the US economy's underlying strength.
The data also provided a hopeful sign for the global recovery with growth slowing in China and the euro zone sliding into recession. The jobless rate in the 17-nation euro zone area rose to 10.7 per cent in January, the highest since the euro started circulating in 2000.
Reuters
