The February jobs report contains some better-than-expected news about hiring, adding to other positive signs about the economy.
The Labor Department says employers added 236,000 jobs in February, while the unemployment rate fell 0.2 percent, to 7.7 percent. Both key measures of the job market were stronger than economists had forecast.
The government says the pace of hiring picked up in health care and construction, as well as professional and business services.
News of the stronger job market comes with the Dow Jones industrial average notching a series of record highs.
Mixed revisions for previous months
Hiring figures were revised over the previous two months. The payrolls gain for January was adjusted lower from the initial reading of 157,000 to 119,000, while the December snapshot was revised higher from 196,000 to 219,000.
The data indicate that employers were adding jobs while $85 billion in mandatory federal budget cuts were approaching March 1. The impact of sequestration reflected the inability of President Barack Obama's administration and congressional leaders to reach a broader budget agreement.
The brighter jobs report comes in advance of this month's two-day meeting of the Federal Reserve, when Chairman Ben Bernanke is to address reporters for the first time this year. The central bank has said that it will keep interest rates at record lows at least until the unemployment rate falls to 6.5 percent. The Fed has continued to buy bonds at a rate of about $1 trillion a year with the goal of encouraging consumer activity, including additional homebuying and car purchases.
Where's the drag?
How to explain the apparent disconnect between the sequester and the improving jobs market?
Nigel Gault, chief economist for IHS Global Insight, says, "Overall, the sequester is not a big-enough jolt to derail the recovery." Gault adds, "The private sector looks pretty healthy. The only sector holding us back now is the government sector." He says two key sectors are powering growth: housing construction, and a rebound in business orders for capital equipment.
In coming months, Gault expects that defense-related production will be negatively affected by the federal cutbacks.
Delayed impact of fiscal stalemate?
Whether there's actually a risk of delayed economic damage from the federal budget stalemate, Rick Cobb, executive vice president with global outplacement firm Challenger, Gray & Christmas, isn't so sure. Says Cobb: "We can say there's 750,000 jobs on the table based on the sequester issues, but no one knows how many of those are going to be impacted." He adds, "This is cynical, but I feel like those jobs aren't going to go away. They might be outsourced."
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