The U.S. economy is showing more signs of improvement, with the unemployment rate falling to 5.5 percent in February, its lowest rate since May 2008.
Friday’s report from the Labor Department showed a drop from the January rate of 5.7 percent, with a net gain of 295,000 jobs. That surpassed the expectations of economists polled by the Reuters news agency, who’d predicted a drop to 5.6, with a net gain of 240,000 jobs.
The February rate, down more than a percentage point from a year ago, also may encourage the Federal Reserve to start raising interest rates.
Speaking Friday at a town hall event at Benedict College in South Carolina, President Barack Obama said, “Our businesses have added more than 200,000 jobs a month for the past year, and we have not seen a streak like that in 37 years."
"Over the past five years, businesses have created nearly 12 million new jobs," he added.
A White House statement said more steps were needed to "continue strengthening wages for the middle class."
The largest boost in hiring was in restaurants, which added 59,000 jobs. That was closely followed by business services, which advanced by 51,000 jobs.
Employers also were hiring in construction, health care and transportation, buoyed by an increase in consumer spending. The Fed reported earlier this week that home and car sales increased in most areas over the last quarter, among other positive signs.
However, the jobless-rate decline primarily came from people leaving the labor force, Reuters said.
Average hourly earnings rose by 3 cents, the labor report said. Mark Hamrick, Washington bureau chief for Bankrate.com, said the job growth was welcome news, but "one thing we continue to wait for is a better improvement in wage growth.”
Although unemployment has fallen dramatically since hitting a peak of 10 percent in 2009, average wages have risen only 2 percent in the past 12 months.
That could change if hiring trends continue. A recent survey by the American Institute of Certified Public Accountants suggested the number of companies looking to expand exceeded the number of companies who weren't.
The labor report had other encouraging news: While 2.7 million job-seekers have been out of work for at least 27 weeks — accounting for almost a third of the unemployed — their numbers have declined by 1.1 million compared with the figure of a year ago.
While the data showed a stronger job market than most economists had predicted, there are still 8.7 million people unemployed. That was slightly lower than the previous month, and down 1.7 million from a year ago. There were also 6.6 million people who work part time and want full-time jobs.
Stock prices tumbled Friday, with the Dow Jones industrial average ending the day nearly 280 points down. “The reason why we may have seen an initial negative reaction to the jobs report," Bankrate’s Hamrick said, "is for the very reason that the Federal Reserve may be getting closer to raising interest rates.”
Analysts think the Federal Reserve could start raising interest rates by the middle of the year if the economy continues to improve. But the central bank said much would depend on whether inflation remained below its target level of 2 percent. Economists say a low inflation rate could be a signal of weak consumer demand.
Luis Ramirez, Jim Randle and Mil Arcega contributed to this report; some material came from Reuters.