U.S. job growth accelerated sharply in February despite the icy weather that gripped much of the nation, easing fears of an abrupt economic slowdown and keeping the Federal Reserve on track to continue reducing its monetary stimulus.
Employers added 175,000 jobs to their payrolls last month after creating 129,000 new positions in January, the Labor Department said on Friday. The unemployment rate, however, rose to 6.7 percent from a five-year low of 6.6 percent as Americans flooded into the labor market to search for work.
"It reinforces the case for the economy being stronger than it's looked for the last couple of months," said Bill Cheney, chief economist at John Hancock Financial Services in Boston. "It makes life easier for the Fed and feeds into continuing the tapering process."
The report also showed the largest increase in average hourly earnings in eight months and the payrolls count for December and January was revised up to show 25,000 more jobs created during those months than previously reported.
Investors on Wall Street cheered the report and the Standard & Poor's 500 index reached a fresh intraday record high before falling back to trade marginally lower.
The dollar lifted off a four-month low against a basket of currencies, while the yield on the benchmark 10-year U.S. Treasury note jumped to a six-week high, putting it on course for its biggest weekly rise in three months.
Interest rate futures showed that traders ramped up bets on the Fed raising rates a bit sooner than had been previously thought. They now point to a 53 percent probability of a rate hike in June 2015.
Unusually cold and snowy weather has disrupted activity in much of the United States for months, and a few economists had begun to speculate that the U.S. central bank could reconsider its plan to wind down its bond-buying stimulus.
The eastern and central United States experienced record low temperatures last month, and ice and snow blanketed densely populated areas during the week employers were surveyed for February payrolls. The winter storms left Wall Street bracing for a much weaker report. Economists had forecast nonfarm payrolls rising by only 149,000 jobs.
The weather, however, did have an impact. It cut into the length of the average workweek, which hit its lowest level since January 2011 and led to a drop in a measure of total work effort. But economists expect a reversal as soon as this month.
"The economy will defrost