Beating economic forecasts, the U.S. economy added 236,000 new jobs in February, according to preliminary data from the U.S. Department of Labor, and the official unemployment rate fell to 7.7%, the lowest level in four years. It was 7.9% the previous month.
Economists had projected more modest job gains of around 150,000 to 160,000, but the monthly pace has increased in recent months due to an improving housing market, record gains in the stock market, and improvement in consumer confidence.
American consumers were much more confident in February, according to the Conference Board’s Consumer Confidence Index, which rose to 69.6, up from 58.4 in January.
Economists say the U.S. economy must create at least 150,000 new jobs each month just to keep up with changes in population and the labor market, and it must create about 250,000 jobs each month to quickly bring down the unemployment rate.
The unemployment rate is being closely watched because Federal Reserve Board Chairman Ben Bernanke has said the Fed will keep interest rates at today’s historically low levels until unemployment falls to 6.5%.
February jobs data are preliminary and subject to revision, but they indicate that private companies added 246,000 jobs, with gains in professional and business services, construction, health care, and retail. Manufacturers added 14,000 jobs.
Government employers shed 10,000 jobs, mostly in state and local governments.
One negative part of the monthly jobs report is that the labor force participation rate slightly declined to 63.5% from 63.6% in January, and the number of people who left the workforce rose to 89.304 million from 89.008 million in January.
