(Corrects second paragraph to show that revision was to January
* Nonfarm payrolls increase 235,000 in February
* Unemployment rate falls to 4.7 percent
* Average hourly earnings rise 0.2 percent
By Lucia Mutikani
WASHINGTON, March 10 U.S. employers hired
workers at a robust pace in February, beating expectations, and
wages grinded higher, which could give the Federal Reserve the
green light to raise interest rates next week despite slowing
Nonfarm payrolls increased by 235,000 jobs last month as the
construction sector recorded its largest gain in nearly 10 years
due to unseasonably warm weather, the Labor Department said on
Friday. January's employment gains were revised up to 238,000
from the previously reported 227,000.
Fed Chair Janet Yellen signaled last week that the U.S.
central bank would likely hike rates at its March 14-15 policy
Job gains averaged 209,000 per month over the past three
months, well above the 75,000 to 100,000 needed to keep up with
growth in the working-age population.
"The report seals the deal for a rate hike next week. The
labor market is where the Fed wants it to be," said Gus Faucher,
deputy chief economist at PNC Financial in Pittsburgh.
Last month's brisk clip of hiring was accompanied by steady
wage growth, with average hourly earnings rising 6 cents, or 0.2
percent. January's wage growth was revised up to 0.2 percent
from the previous 0.1 percent gain. That lifted the year-on-year
increase in wages to 2.8 percent from 2.6 percent in January.
The unemployment rate fell one-tenth of a percentage point
to 4.7 percent, even as more people rushed into the labor
market, encouraged by the hiring spree. Economists had forecast
employment increasing by 190,000 jobs last month.
U.S. stocks rose, but gains were curbed by the prospect of
higher borrowing costs.
The dollar fell against a basket of currencies amid
disappointment that wages were only growing gradually. The
greenback was also hurt by news that the European Central Bank
had discussed the possibility of raising interest rates before
the end of its quantitative easing program.
Prices for U.S. government bonds rose, with the yield on the
benchmark 10-year Treasury note retreating from a 12-week high.
With the labor market near full employment, wage growth
could speed up as companies are forced to raise compensation to
retain employees and attract skilled workers. A proxy for
take-home pay rose a solid 0.5 percent in February.
The annual wage increase is close to the 3 percent to 3.5
percent range that economists say is needed to lift inflation to
the Fed's 2 percent target. Inflation is already firming, in
part as commodity prices rise.
Rising inflation, together with a tighter labor market,
stock market boom and strengthening global economy, has left
some economists expecting that the Fed could increase rates much
faster than currently anticipated by financial markets.
The U.S. central bank lifted its benchmark overnight rate in
December and has forecast three rate increases for 2017.
PARTICIPATION RATE UP
"We continue to expect the Fed to raise its policy rate by
an above-consensus four times this year," said Paul Ashworth,
chief U.S. economist at Capital Economics in Toronto.
Job growth has averaged more than 186,000 per month since
January 2010. While Donald Trump's victory in last November's
presidential election sparked a stock market rally and jumps in
consumer and business confidence, there has been no surge in
either business or consumer spending.
Data ranging from trade to consumer and business spending
suggest the economy slowed further early in the first quarter
after growing at a 1.9 percent annualized rate in the final
three months of 2016. The Atlanta Fed is forecasting gross
domestic product growing at a 1.2 percent rate this quarter.
"It's important to remember that President Trump inherited
an economy that was already making steady progress towards full
employment," said Elise Gould, a senior economist at the
Economic Policy Institute in Washington.
The labor force participation rate, or the share of
working-age Americans who are employed or at least looking for a
job, increased one-tenth of a percentage point to 63 percent in
February, the highest level since March 2016.
The employment-to-population ratio rose to an eight-year
high of 60 percent from 59.9 percent in January.
A broad measure of unemployment that includes people who
want to work but have given up searching and those working
part-time because they cannot find full-time employment fell
two-tenths of a percentage point to 9.2 percent last month.
All sectors of the economy, with the exception of retail and
utilities, expanded payrolls in February. Manufacturing
employment increased 28,000, the largest gain since August 2013,
as rising oil prices fueled demand for machinery.
Construction payrolls surged 58,000, the biggest increase
since March 2007, as warmer weather pulled forward hiring at
building and civil engineering sites. The mining sector added
7,700 jobs last month, led by oil field hiring. Mining
employment has risen by 20,000 jobs since October.
Retail sector employment fell 26,000, the biggest decline
since December 2012, after a gain of 39,900 jobs in January.
Retailers including J.C. Penney Co Inc and Macy's Inc
have announced thousands of layoffs as they shift toward
online sales and scale back on brick-and-mortar operations.
Utilities shed 1,000 jobs last month because of the milder
weather. Government payrolls increased by 8,000 jobs, with
federal employment rising 2,300 despite a freeze on the hiring
of civilian workers that went into effect in January.
(Reporting by Lucia Mutikani; Editing by Paul Simao)