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U.S. adds robust 235,000 jobs, making Fed rate hike all but sure

 
The Space Needle towers in the background beyond a container ship anchored in Elliott Bay near downtown Seattle. U.S. employers hired at a brisk pace in February adding 235,000 jobs, and the unemployment rate fell to 4.7 percent. [Associated Press}
The Space Needle towers in the background beyond a container ship anchored in Elliott Bay near downtown Seattle. U.S. employers hired at a brisk pace in February adding 235,000 jobs, and the unemployment rate fell to 4.7 percent. [Associated Press}
Published March 11, 2017

WASHINGTON — U.S. employers added a robust 235,000 jobs in February and raised pay at a brisk pace — signs that a resilient economy has given many companies the confidence to hire in anticipation of solid growth ahead.

With the unemployment rate dipping to a low 4.7 percent from 4.8 percent, the job market appears to be fundamentally healthy or nearly so.

Friday's employment report from the government showed that more people began looking for jobs last month, an encouraging sign that they've grown confident about their prospects. Hiring was strong enough to absorb those new job seekers, as well as some of the previously unemployed.

The picture of an economy on solid footing nearly eight years after the Great Recession ended has made it all but certain that the Federal Reserve will raise interest rates next week and signal the likelihood of additional rate hikes ahead.

February's jobs report was the first to cover a full month under President Donald Trump. During the presidential campaign, Trump had cast doubt on the validity of the government's jobs data, calling the unemployment rate a "hoax."

But just minutes after the report was released at 8:30 a.m., Trump retweeted a news report touting the job growth.

Asked about Trump's past dismissal of Bureau of Labor Statistics jobs numbers in the past in light of Friday's strong economic report, spokesman Sean Spicer quoted the president:

"I talked to the president prior to this, and he said to quote him very clearly: 'They may have been phony in the past, but it's very real now.' "

Spicer laughed as he shared the sentiments and elicited laughter from some reporters as well. But what Spicer, and Trump, were admitting was a stark reality: that Trump appears content to undermine facts that don't serve his interests, but will not hesitate to embrace them when they do.

Economists were mainly encouraged by the employment data.

"It's hard to find much to dislike in the February jobs report," said Michael Feroli, an economist at JPMorgan Chase.

About a quarter of the job gains occurred in construction, which added 58,000 jobs, the most in a decade. Unseasonably warm weather likely inflated that figure, economists said. Last month was the second-warmest February since 1895, according to the Commerce Department.

Some economists cautioned that last month's outsized job gains might be hard to sustain. If warm weather did help elevate construction hiring in February, for example, it might also have the effect of subtracting from job growth that would normally occur in early spring.

"There will probably be some weather payback in March," Ted Wieseman, an economist at Morgan Stanley, said in an email.

Mining, which includes oil and gas drilling, added 7,700 jobs last month, the most in nearly three years. Energy companies have increased drilling in response to higher oil prices, reversing nearly two years of job losses. Oil prices have dropped this week, though.

As unemployment declines, hiring typically slows as the pool of available workers shrinks. Many small businesses are complaining that they cannot find workers with the qualifications they need. This trend could weigh on hiring in coming months.

Stock prices fluctuated throughout the day Friday, and the Dow Jones Industrial Average closed up a modest 44 points.

The February jobs data likely provided the final piece of evidence the Fed needed to raise rates after its next policy meeting Wednesday. It would be the Fed's third rate hike in 15 months. The Fed's inclination to tighten borrowing rates reflects how far the economy has come since the central bank cut its benchmark short-term rate to zero in 2008 and kept it there for seven years to support a fragile economy.

"There are few factors more important to consumers than jobs," said Russell Price, an economist at Ameriprise Financial. "Overall, consumers are in great shape to support an accelerated pace of economic growth."