March 8, 2013 -- The U.S. economy added a better-than-expected 236,000 jobs in February as the unemployment rate fell to 7.7 percent, the Labor Department reported Friday. The economy got a boost from the strengthening housing sector, which saw employment jump the most in six years.
Many economists like JJ Kinahan, chief derivatives strategist of TDAmeritrade, expected around 171,000 jobs would be added. Economists expected the jobless rate to drop back to the 7.8 percent it was in September.
"This was an outstanding employment report on many fronts," said Robert Johnson, director of economic analysis at Morningstar. "First the total employment gain of 236,000 was one of the larger in gains in the last 12 months. The gains were spread across a wide variety of industries with construction being a stand out performer. The payroll tax increase seemed to have no impact on employment with even the restaurant sector showing gains."
The February jobless rate was the lowest in five years but still not near the 5 percent rate recorded before the economic meltdown of 2007-2008. The jobs gain for January was revised down to 119,000 today.
"Private companies, which provide vast majority of new jobs, continue to grow, which is good news for the economy," said Brian Hamilton, chairman of the consulting firm Sageworks.
The Labor Department revised the number of jobs added in January to 119,000 from 157,000, and those in December to 219,000 from 196,000.
Kinahan said the 236,000 job additions are an amazing increase that took many by surprise. "What the number does do is solidify those that say the market is not just about the Fed and their support but that we are seeing real signs of recovery in the market overall."
"This is reflected in the fact that construction jobs were one of the fastest growing in today's report. This will also mean added pressure on the Fed to come up with a plan to unwind their fiscal stimulus."
The report, he said, helps "give confidence to many that the recovery is on its way and that we may have turned the corner."
Added Johnson, "In addition to the large gain in jobs, the unemployment rate was down more than anyone was thinking. To make things better, wages were up and the number of hours worked were up, both often good indicators of gains in the months ahead."
On Wednesday, private payroll processor ADP said it added 198,000 jobs in February, led by the transportation and trade sectors. The headline number was more than the 173,000 jobs some economists expected.
The Labor Department reported on Thursday that unemployment claims fell 7,000 in the week that ended March 2, near the five-year lows reached in January, the Associated Press reported.
The stock market reached record highs this week, with the Dow Jones Industrial Average beating the previous high of Oct. 9, 2007.
"There's tremendous momentum in the market right now," Kinahan said.
But with those highs comes an incentive to sell stocks and take profits, so even a little bit of negative news could cause a down day for the market.