US economy adds impressive 242K jobs in February

US economy adds impressive 242K jobs in February
© Getty Images

Employers added an impressive 242,000 jobs in February, beating expectations as the labor market maintains strong growth despite global economic turbulence.

The unemployment rate held steady at 4.9 percent, the lowest level in eight years, the Labor Department reported on Friday.

Economists had expected between 195,000 and 220,000 jobs, and February's numbers should help calm fears of economic uncertainty.

Jobs growth was revised up by 30,000 for December and January. In the past three months, growth has averaged 228,000 a month.

Beth Ann Bovino, chief economist at Standard & Poor's Ratings Services, said that the “U.S. economy has found its second wind.”

"After a tepid start to 2016, February's jobs data indicated that the U.S. economy is back in action, with solid jobs gains likely to quell recession concerns and provide some confidence to those uncertain about entering the workforce,” Bovino said in an email to The Hill.

Employment grew by 530,000, pushing up the labor participation rate to 62.9 percent, from 62.7, a sign that discouraged workers are jumping back into the workforce.

Jason FurmanJason FurmanHarvard economists: Tax law costs .2T after accounting for economic growth In business, 'big' doesn't always mean 'bad' New data counters liberal pessimism on economy MORE, chairman of the White House’s Council of Economic Advisers, said that businesses have now added 14.3 million jobs over six straight years, extending the longest streak on record.

In the past two years, the U.S. economy has added more private-sector jobs than in any two years since 1999, Furman said.

The Federal Reserve will keep a close eye on the jobs report as the central bank decides when to hike interest rates again.

“The U.S. economy remains robust,” Aaron Kohli, interest rate strategist at BMO Capital Markets, told The Wall Street Journal.

“The concern about international turmoil filtering into the U.S. economy is overblown,” he said. 

Hourly wages slipped 3 cents in February after a solid 12-cent rise in January; wages have risen by 2.2 percent over the year.

Bovino acknowledged that the drop in average hourly earnings “will prompt concerns about whether workers are reaping the full benefits of the recovery.”

Several economists surmised that jobs growth in lower-paying sectors was the reason why overall wages fell. 

“The surprising decline in wage gains may have been due, in part, to increased demand for lower-paying service jobs, like retail and hospitality jobs, as people frequented the malls and restaurants after the snow melted in February,” Bovino said.

Sophia Koropeckyj, managing director at Moody’s Analytics, said that “the decline in average hourly earnings for all workers is disappointing but this could be a mix result a higher paying goods producing industries shed jobs while lower paying consumer industries expand.”

“Nonetheless, a solid upward trend has been established,” Koropeckyj said.

Furman said more work remains to drive faster wage growth, including investing in infrastructure, implementing trade agreements like the Trans-Pacific Partnership, and raising the minimum wage.

Mark Zandi, chief economist of Moody’s Analytics, said this week that the labor market is headed for full employment sometime this summer with the jobless rate expected to fall to 4.5 percent.

That should spur stronger wage growth, which should hit a 3 percent pace by the time the election rolls around in November, he said.

But Zandi cautioned that the labor market won't be able to sustain average jobs growth of 200,000 once the economy hits full employment.

A slowdown in jobs growth may give the Republican nominee reason to question the economy's strength during President Obama’s final months in office, but Zandi said that steady jobs growth is instead the sign of a “very, very strong economy.”

Another positive is that unemployment insurance claims have held below the 300,000 level for the past year.

“The last time this happened was in December 1973, more than four decades ago,” said Heidi Shierholz, the Labor Department’s chief economist.

“The streak caps six years of tremendous progress in the U.S. labor market and demonstrates our labor market’s exceptional durability,” Shierholz said.

Construction employment continued to trend up in February, rising by 19,000. The sector has added 253,000 over the past 12 month.

Manufacturing, which is still struggling with a strong dollar that pushes up prices for U.S. exports, lost 16,000 jobs.

The decline in oil prices continued to weigh on the mining sector, which shed 18,000 jobs in February.

Since a recent peak in September 2014, mining employment has fallen by 171,000 jobs.

Retailers added 54,900 jobs while restaurants and bars added 40,200. Healthcare added 57,000 jobs.

Last updated at 10:44 a.m.