The economy added a surprisingly-strong 175,000 jobs in February. Economists were expecting 150,000. The government also revised the last two months’ reports higher than originally reported. Employers added 129,000 jobs in January, up from the initial report of 113,000 and 84,000 jobs in December, up from a previously revised 75,000.
Among the sectors that saw the strongest gains: professional and business services, which added 79,000 jobs in February. The manufacturing sector added 15,000 jobs in February after a strong showing in January with 50,000 jobs created. The unemployment rate ticked up to 6.7% in February from 6.6% in January. The labor force participation rate remained near historic lows at 63% in February.
Yahoo Finance Editor in Chief Aaron Task says the markets' initial reaction is likely to be positive, but the overall effect of this report will not have a significant impact on the outlook for the economy. “It doesn’t change the broader picture that we’re in a somewhat disappointing, lackluster economy where we have growth but just not enough of it,” said Task.
The Federal Reserve had identified 6.5% unemployment as a benchmark below which it would consider raising interest rates from their current levels near zero. The unemployment rate fell to 6.6% faster than many expected, even as job creation came in slower than expected. In an interview with the Wall Street Journal, New York Federal Reserve President William Dudley said that the 6.5% threshold for considering raising interest rates is “obsolete.”
Jeff Macke, Host of Breakout, says the 6.5% unemployment rate was a "dumb target" to begin with. The "unemployment rate is the hit-by-pitch baseball stat of all economic stats. Who cares?" asks Macke. "It's so muddled. It's based on 19 different, wrong inputs that we know are slightly off to come up with this magical 6.7% number."