U.S. Economy Added 175,000 Jobs In February; Unemployment Edged Up To 6.7 Percent

In this Wednesday, Jan. 22, 2014, photo, job seekers line up to sign in before meeting prospective employers at a career fair at a hotel in Dallas. The Labor Department releases employment data for February, on Friday, March, 7, 2014. (AP Photo/LM Otero)

WASHINGTON (AP) – U.S. employers stepped up hiring in February despite a blast of harsh winter weather, likely renewing hopes that the economy will accelerate this year.

The Labor Department said Friday that employers added 175,000 jobs, up from 129,000 in January. The unemployment rate rose to 6.7 percent from a five-year low of 6.6 percent as more Americans began seeking jobs but many didn't find them. That's still an encouraging sign because more job hunters suggest that people were more optimistic about their prospects.

Friday's figures were a welcome surprise after recent reports showed that harsh weather had closed factories, lowered auto sales and slowed home sales. Along with an increase in wages last month, the report suggests that employers are confident that consumer spending will pick up in coming months.

"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 ... employment growth is likely to accelerate further," Paul Dales, an economist at Capital Economics, said in a note to clients.

Stock futures rose modestly after the report's release at 8:30 a.m. Eastern time.

The severe winter weather appeared to have had little effect on payrolls. Construction companies, which usually stop work in bad weather, added 15,000 jobs.

Manufacturing gained 6,000 for the second month in a row. Government added 13,000 jobs, the most in six months. Shipping and warehousing companies and retailers cut jobs.

The report presents "a picture of a grinding but positive recovery in the economy," said Stephen Wood, chief market strategist at Russell Investments.

The government revised up its estimate of job gains for December and January by a combined 25,000. December's gain was revised up from 75,000 to 84,000, January's from 113,000 to 129,000.

Average hourly pay rose 9 cents in February to $24.31, the most since June. Hourly wages have risen 2.2 percent over the past 12 months, ahead of 1.6 percent inflation over that time.

Friday's report makes it likely that the Federal Reserve will continue reducing its monthly bond purchases at its next meeting March 18-19. The Fed is buying Treasury and mortgage bonds to try to keep long-term loan rates low to spur growth. Fed policymakers have reduced their monthly bond purchases by $10 billion at each of their past two meetings to $65 billion.

The low temperatures and snow storms that hit the eastern half of the country in February might still have held back hiring. The number of Americans who said weather forced them to work part time rather than full time reached the highest level for February in the 36 years that the government has tracked the figure. The average work week fell.

Some recent reports hint that the economy will accelerate as the weather warms. The number of people who applied for unemployment benefits fell last week and is at about the same level as before the Great Recession.

Applications essentially reflect layoffs. The decline suggests that companies are confident about future growth, because layoffs would rise if employers expected business to weaken. Instead, businesses advertised more jobs online last month, according to the Conference Board. Online job ads rose 268,100 in February to 5.19 million.

Still, other factors are weighing on the economy. Auto makers and other manufacturers built up big stockpiles of goods in the second half of last year. That means they are likely producing fewer goods this year and is probably one reason factory orders are down.

Most economists forecast the economy will grow at a 2 percent annual pace or less in the first three months of the year, down from a 2.4 percent pace in the final three months of 2013. But they expect growth to accelerate in the spring and summer to roughly a 3 percent pace.