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Economy Adds 243,000 Jobs in February; Unemployment Rises to 4.8%

Hiring gained ground in February with employers adding 243,000 jobs, the most in three months. Brighter job prospects sent people streaming into the labor market, however, pushing the unemployment rate up marginally to 4.8 percent.

The employment report issued Friday by the Labor Department showed that job gains were fairly broad-based and suggested the jobs climate is gaining momentum.

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"American workers are defying the pessimists," President Bush told a Washington meeting of the National Newspaper Association. "Our economy is strong."

Construction companies, retailers, financial services all other industries posted payroll increases. That blunted weakness in manufacturing, reflecting job losses in the automotive sector.

"Businesses are apparently seeing strong enough growth in demand for their goods and services to look for more workers — and businesses are being forced to pay up for them because wages are rising strongly, too," said economist Joel Naroff, president of Naroff Economic Advisors. "The job market is becoming more and more friendly if you are a worker or looking to become one."

The unemployment rate inched up to 4.8 percent from a 4 1/2 year low of 4.7 percent in January. The bump-up in the jobless rate came as people — feeling better about job prospects — applied for work in droves.

"You are seeing a large number of people coming out of the woodwork because there are jobs to be found. People are now looking for jobs because it is now worth looking," said Bill Cheney, chief economist at John Hancock.

The 243,000 gain in jobs in February marked a pickup from the 170,000 positions added in January. January's payroll gain turned out to be slightly lower than the 193,000 new jobs first reported. But December's showing was a bit stronger.

The performance in payrolls in February exceeded analysts' expectations. Before the report was released they were forecasting jobs to grow by 210,000. But they were expecting the unemployment rate to hold steady.

The fresh snapshot of the labor market comes as President Bush continues to cope with sagging job-approval ratings. Just 37 percent approve of his overall performance, the lowest level of his presidency, according to an AP-Ipsos poll.

The report also showed that employees' average hourly earnings rose to $16.47 in February, a 0.3 percent increase from January. That was in line with economists' expectations.

However, compared with February of last year, average hourly earnings increased by 3.5 percent — the most since September 2001.

While wage growth is good for workers, a big pickup in wages — if sustained — can stir fears about inflation among economists and at the Federal Reserve.

To fend off inflation, Federal Reserve Chairman Ben Bernanke and his colleagues are expected to boost short-term interest rates on March 28. That meeting will be Bernanke's first as Fed chief. The central bank under former chairman Alan Greenspan has been tightening credit since June 2004.

Friday's report showed that despite blizzards in the Northeast, construction companies added 41,000 jobs in February. That followed a gain of 55,000 in January — as mild weather helped employment.

Retailers added more than 6,000 jobs in February, after cutting more than 13,000 positions in January.

Financial companies expanded payrolls by 22,000 in February, following a gain of 21,000 in January.

Manufacturers, however, shed 1,000 jobs in February after adding 7,000 in the previous month. The largest job losses were in the automotive sector and for makers of primary metals.

Separately, consumer confidence dropped in early March as people fretted about the economy's performance and their own financial fates in the months ahead.

The RBC CASH Index, based on results from the international polling firm Ipsos, showed confidence at 86.2 in early March. That was down considerably from February's reading of 96.1 — a 16-month high.

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