WASHINGTON (Reuters) - Employers added more than 200,000 workers to their payrolls for a third straight month in February, a sign the economy was strengthening and in less need of further monetary stimulus from the Federal Reserve.
Friday’s Labor Department report, which showed nonfarm payrolls increased 227,000 last month, also bolstered President Barack Obama’s chances for re-election.
The jobless 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.
“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 Treasury debt prices dipped as traders dialed down the prospects for more bond buying by the U.S. central bank.
The 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 U.S. goods and services.
Still, he suggested the outlook would have to deteriorate for the U.S. 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 U.S. 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 U.S. 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 U.S. manufacturing in an appeal to the blue collar voters he needs to hold the White House.
“We can’t go back to the same policies that got us into this mess. We can’t go back to an economy that was weakened by outsourcing and bad debts and phony financial profits,” Obama said. “We have got to have an economy that’s built to last and that starts with American manufacturing.” Republican presidential hopeful Mitt Romney said Obama had promised 37 months ago that he would push the jobless rate below 8 percent with a massive government stimulus program.
“It has not been below 8 percent since. This president has not succeeded. This president has failed and that’s the reason we’re going to get rid of him in 2012,” he said at campaign event in Jackson, Mississippi.
While some parts of the jobs market have benefited from unseasonably warm winter weather, economists say a genuine improvement is under way, even though they expect a slight pullback in March.
Private companies again accounted for all the job gains in February, 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.
Auto companies have increased production and are taking on new workers and adding shifts and overtime to meet pent-up demand. Output was disrupted early last year by the tsunami and earthquake in Japan.
Although hiring is picking up pace, wage gains are sluggish. Average hourly earnings rose just three cents in February. Over the past 12 months, they were up 1.9 percent - a figure that has changed little over the past year.
With gasoline prices up 49 cents since January, wages continue to lag inflation, which could pose a hurdle to increased consumer spending.
Outside of manufacturing, construction payrolls fell 13,000, the first decline in four months. Temporary employment rose by 45,200 in February after climbing 32,100 in January.
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.
The economy faces persistent long-term unemployment. In February, about 43 percent of the 12.8 million unemployed Americans had been out of work for more than six months.