US job growth accelerated sharply last month despite the icy weather that gripped much of the nation, easing fears of an abrupt economic slowdown and keeping the US Federal Reserve on track to continue reducing its monetary stimulus.
US employers added 175,000 jobs to their payrolls last month after creating 129,000 new positions in January, the US Department of Labor said on Friday. The unemployment rate, however, rose to 6.7 percent from a five-year low of 6.6 percent as Americans flooded into the labor market to search for work.
“It reinforces the case for the economy being stronger than it’s looked for the last couple of months,” John Hancock Financial Services in Boston head economist Bill Cheney. “It makes life easier for the Fed and feeds into continuing the tapering process.”
The report also showed the largest increase in average hourly earnings in eight months and that the payrolls counts for December last year and January were revised up to show 25,000 more jobs created during those months than previously reported.
Investors on Wall Street cheered the report. US stocks ended mostly higher, with the Standard & Poor’s 500 index closing at a record. The US dollar bounced off a four-month low, while prices for US Treasury debt fell, with the yield on the benchmark 10-year note hitting a six-week high.
Interest rate futures showed that traders ramped up bets on the Fed raising rates a bit sooner than had been previously thought. They now point to a 54 percent probability of a rate increase in June next year.
Unusually cold and snowy weather has disrupted activity in much of the US for months, and a few economists had begun to speculate that the US central bank could reconsider its plan to wind down its bond-buying stimulus.
The eastern and central US experienced record low temperatures last month and ice and snow blanketed densely populated areas during the week employers were surveyed for last month’s payrolls.
The winter storms left Wall Street bracing for a much weaker report. Economists had forecast nonfarm payrolls rising by just 149,000 jobs.
However, the weather did have an impact. It cut into the length of the average work-week, which hit its lowest level since January 2011 and led to a drop in a measure of total work effort. However, economists expect a reversal as soon as this month.
“The economy will defrost in the spring and heat up in the summer,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York. “We should see solid gains in job growth in coming months.”
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.
It also showed that 601,000 people could not get to work because of the weather, the highest level for February since 2010. Economists said job growth last month would have been as high as 200,000 if not for the weather.
Payrolls averaged about 205,000 new jobs per month in the first 11 months of last year, but that figure dropped to just 129,000 for December last year, January and last month.