Payrolls increased more than forecast in February and the jobless rate unexpectedly fell to a five-year low of 7.7 percent, a sign U.S. employers were undaunted by the budget impasse in Washington.
Employment rose 236,000 last month after a revised 119,000 gain in January that was smaller than first estimated, Labor Department figures showed today in Washington. The median forecast of 90 economists surveyed by Bloomberg projected an advance of 165,000. The jobless rate dropped from 7.9 percent. Hiring in construction jumped by the most in almost six years.
The unemployment rate, derived from a separate survey of households, was forecast to hold at 7.9 percent, according to the Bloomberg survey median. The decline reflected both a gain in employment and an increase in people leaving the labor force.
The reductions in the rate of spending will trim growth by 0.5 percentage point this year and wipe out 350,000 jobs if they remain in place through December, according to the median forecast of 26 economists surveyed by Bloomberg on Feb. 25. Earlier this year, lawmakers also allowed the payroll tax funding Social Security benefits to revert to 6.2 percent from 4.2 percent, crimping household earnings.