Job creation ramped up somewhat in February, posting a better-than-expected gain of 175,000 despite expectations that weather would keep the count low. The unemployment rate edged higher to 6.7 percent, according to the latest report from the Bureau of Labor Statistics.
Economists polled by Reuters expected the U.S. economy to have created 149,000 jobs in February, up from 129,000, which was revised higher from 113,000.
Employment growth had waned over the past two months, and February’s number, while an improvement, remains below trend of where it had been for the past year, during which monthly job creation has averaged 189,000.
A separate measure of unemployment, which includes discouraged and underemployed workers, edged lower to 12.6 percent from 12.7 percent.
(Read more: 5 clues to the health of US job market)
Traders cheered the upside surprise on the nonfarm payrolls report, sending stock futures higher to indicate a positive open for Wall Street. Government bond yields edged lower.
“The February jobs report is something of a perfect storm for the U.S. economy and is likely to further fuel bullish fervor across the stock market,” Andrew Wilkinson, chief market analyst at Interactive Brokers, said in a note. “The latest strength in the stock market appears to have been driven by hopes that what the winter took away, the spring will reclaim in terms of a jobs rebound. Today’s employment report compounds such expectations. ”
The poor employment situation has posed a quandary for the Federal Reserve, which is unwinding its monthly asset purchase program known as quantitative easing but holding to its zero interest rate policy for short-term rates.
Though the U.S. central bank has set a 6.5 percent target for the jobless number before it will consider raising rates, it likely will have to reconsider and could so as soon as its March meeting.
The declining rate has been a mix of middling job creation and labor force participation that has languished around 35-year lows. At the same time, long-term unemployment remains a major structural impediment, making the Fed’s final decision on interest rates likely more reliant on an arbitrary qualitative impression of economic health.
Indeed, the number of people without jobs for 27 weeks or longer grew 203,000 to 3.8 million—a group that now represents fully 37 percent of the unemployed.
(Read more: Jobless rate to dip below 6% in 2014: Fed’s Bullard)
Weather had been blamed for weakness in December and January, though there was considerable debate over the validity of that argument. However, the number not working due to weather rose to 601,000 for the month, the highest rate since 2010.
“If the economy managed to generate 175,000 new jobs in a month when the weather was so severe, once the weather returns to seasonal norms payrolls employment growth is likely to accelerate further,” Paul Dales, senior U.S. economist at Capital Economics, said in a note.
Dales said the February job growth “pretty much guarantees” the Fed will continue to reduce QE, which is at $65 billion a month after consecutive reductions of $10 billion at the past two meetings.
Biggest job gains in February came from professional and business services, which added 79,000 positions. Temporary help grew by 24,000.
Wholesale trade gained 15,000 jobs and bars and restaurants contributed 21,000 and construction also added 15,000.
Retail lost 4,000 jobs for the month while government employment was little changed. However, electronics and appliances lost 12,000, “the first sign of the impact of mass retail store closures across the country,” said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors.
Wage pressure, absent through most of the post-recession jobs picture, showed up in February, with an increase of nine cents an hour to $24.31. The average work week, though, edged lower to 34.2 hours.
—By CNBC’s Jeff Cox. Follow him on Twitter @JeffCoxCNBCcom.