WASHINGTON (AFP) – A bumper new US employment report has shown the troubled jobs market gained momentum last month, raising hopes that a final piece of the recovery puzzle is falling into place.
The Labor Department said Friday the unemployment rate dipped to 8.9 percent in February from 9.0 percent the month before, while the economy created a solid 192,000 jobs.
If that trend continues in the next few months, "the employment situation in the United States would be well on its way to recovery," according to Jason Schenker of Prestige Economics.
It was the first time the unemployment rate has fallen below nine percent in nearly two years.
The new numbers were much better than the 63,000 jobs created in January, and capped three months that have seen the unemployment rate fall by almost a percentage point.
President Barack Obama lauded the report, saying: "This morning we learned that the unemployment rate fell to its lowest level in nearly two years.
"Our economy has now added 1.5 million private-sector jobs over the last year and that's progress."
But, he said, "we need to keep building on that momentum."
Amid fears over rising oil prices, the strong report raised optimism that higher prices can be absorbed without doing too much damage to vital consumer spending and without denting company profits.
According to the American Automobile Association, gasoline pump prices have increased by about 18 cents a gallon (3.8 liters) to an average $3.47 in the last week alone.
The report also increased confidence that government layoffs can be offset by a resurgence in private-sector hiring.
As federal and state authorities cut costs in the face of mounting debt, some 30,000 government workers were laid off in February.
But those losses were more than offset by private companies creating 222,000 jobs, much to the relief of the White House and the millions of Americans who are struggling to get back on their feet.
"The labor market may not be great just yet but it is firming and that is good news for job seekers," said Joel Naroff of Naroff Economic Advisors.
Since the recession ended in June 2009, it has seemed like the world's largest economy has taken two steps forward and one step back.
Last year, debt crises in Europe threatened to derail the recovery on both sides of the Atlantic.
Today, rising global oil prices and cuts to government spending at home threaten to make life tougher.
In the interim, US unemployment has remained stubbornly high and the housing market has been moribund, leaving two pillars of the economy looking like Corinthian relics -- no longer fit to carry the load.
House of Representatives Republican leader Eric Cantor said Friday's report was an "encouraging sign that businesses are beginning to hire and people are getting back to work."
Still, after watching some 8.75 million jobs disappear during the recession, millions are still out of work and many experts fear the economy remains vulnerable.
"Tempering the positive tone of today's report was unexpected weakness in hours and average hourly earnings, which suggests a bit less growth of consumer spending in the first half than we previously expected," said analysts at Macroeconomic Advisers.
And according to outplacement firm Challenger, Gray & Christmas, the number of job cuts announced by US-based firms increased for the second consecutive month in February.
"It is too soon to say whether the increases in January and now February represent a trend," said chief executive John Challenger.
"Certainly the specter of rising gas prices could impact employers' staffing decisions over the next six months," he added.
The nationwide average for a gallon of regular unleaded gasoline leapt 4.4 cents overnight to $3.47, the American Automobile Association said Friday. That's up almost 20 cents a gallon from a week ago.
The stock market fell after the news, with traders locking in profits gained from the market's rise in the run up to the announcement.
The Dow Jones Industrial Average was off 88.32 points, around 0.7 percent.