MercoPress. South Atlantic News Agency

US jobs market picks up in February but budget dispute with Congress looms

Alan Krueger, chairman of the White House Council of Economic Advisers said that “more work remains to be done”

Hiring in the US has gathered momentum after government figures showed that the economy created 236.000 jobs in February. The figure was much higher than analysts had expected, and more than the 157,000 jobs created in January.

The unemployment rate fell to 7.7% last month, the lowest since December 2008, from 7.9% in January, figures showed. But the White House's chief economist said more work was needed as Congress remained divided over economic policy.

Employment growth in the US has risen by an average of 195.000 a month in the last three months, figures show. Analysts had forecast a rise of 165.000 jobs for February.

Professional and business services added 73.000 jobs last month, while the construction industry hired 48.000 employees. The health care industry added 32.000 jobs and the retail sector added 24.000 new staff.

Only government lost 10.000 jobs in February, mostly in local education. The public education sector has now lost 340.700 jobs since its 2009 peak.

But the number of long-term unemployed, out of a job for at least 27 weeks, was unchanged, accounting for about 40% of the jobless total.

Analysts are now debating whether the labour market is strong enough to weather a series of public spending cuts, known as the sequester, and whether the Federal Reserve will continue with its loose monetary policy.

The latest jobs report takes into account the period before the sequester officially began on 1 March.

Last week, President Barack Obama signed into effect spending cuts worth 85bn dollars, although he warned that the cuts - if fully realised - would slow US economic growth by 0.5% and cost 750.000 jobs.

Sequestration was drawn up in mid-2011 as Congress and the White House feuded over raising the debt ceiling and how to slash the huge US deficit. Republicans wanted deep cuts in spending, while Democrats insisted on raising taxes as part of any plan to tackle the country's 16.6 trillion debt.

Alan Krueger, chairman of the White House Council of Economic Advisers, said: “While more work remains to be done, today's employment report provides evidence that the recovery that began in mid-2009 is gaining traction.”

The White House continued “to urge Congress to move toward a sustainable Federal budget”, he said, and warned against “reading too much into any one monthly report” as payroll estimates were volatile and could be revised substantially.

John Boehner, the Republican Speaker of the House, said: “Any job creation is positive news, but the fact is unemployment in America is still way above the levels the Obama White House projected when the trillion-dollar stimulus spending bill was enacted, and the federal government's ongoing spending binge has resulted in a debt that exceeds the size of our entire economy.”