US employers added more than 200,000 workers to their payrolls for a third straight month last month, a sign the economy was strengthening and in less need of further monetary stimulus from the US Federal Reserve.
Friday’s US Department of Labor report, which showed that non-farm payrolls increased by 227,000 workers last month, also bolstered US President Barack Obama’s chances of re-election.
The unemployment rate held at a three-year low of 8.3 percent even as people flooded back into the labor force to hunt for work, and 61,000 more jobs were created in December and January than previously thought.
Photo: Bloomberg
“The economy, while nowhere near fully healed, has enough momentum to move forward on its own and seems to be gaining strength,” said Megan Ellis, an economist at John Hancock Financial Services in Boston. “For now, the Fed has little to do except sit, wait and hope.”
Stocks on Wall Street closed higher on the data, while US Treasury debt prices dipped as traders dialed down the prospects for more bond buying by the US central bank.
The US dollar rallied to a near 11-month high against the yen and was on track for a fifth straight weekly gain versus the Japanese currency, its best run in almost five years.
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 monetary easing to drive interest rates lower.
A Reuters poll of 18 of the 21 big Wall Street firms that deal directly with the Fed found that 14 expect the central bank will eventually decide the economy needs more help, although they scaled back expectations for how many bonds it would buy.
The labor force participation rate — the percentage of working-age Americans either with a job or looking for one — rose to 63.9 percent from 63.7 percent in January, suggesting Americans are growing more optimistic on job prospects.
The workforce increased by 476,000 people, the largest gain since April 2010. A broad measure of unemployment, which includes people who want to work, but have stopped looking and those working only part time, but who want more work, dropped to a three-year low of 14.9 percent.
Economists are perplexed at the relative strength of the jobs market, given still-sluggish economic growth.
Growth is expected to slow this quarter from the fourth quarter’s 3 percent annual pace, with high gasoline prices curbing spending and a recession in Europe weighing on exports.
Consumer spending has been flat for three straight months and a report on Friday showed the US trade deficit hit its widest point in three years on high oil prices and record imports, leading some economists to scale back growth forecasts.
Manufacturing registered another sturdy job-creating performance after scoring its biggest job gains in a year in January. There was also strong demand for temporary help, a potential harbinger of future permanent hiring.
The US unemployment rate has dropped 0.8 percentage point since August, providing relief to Obama, who faces an election battle in which the economy is at center stage.
The economy would need to generate about 170,000 jobs per month to push the unemployment rate below 8 percent by the time voters go to the polls in November.
Speaking at a Rolls Royce factory in the electoral battleground state of Virginia, Obama said the data gave him “confidence there are better days ahead,” and he vowed to support US manufacturing in an appeal to the blue collar voters he needs to hold the White House.
Private companies again accounted for all the job gains last month, adding 233,000 positions. Government employment fell a modest 6,000, but it was the sixth straight monthly decline.
Manufacturers hired 31,000 new workers, with all the gains coming from hiring at factories that produce long-lasting goods.
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