WASHINGTON — US employers added more jobs than forecast in February and the unemployment rate dropped to 5.5%, the lowest in almost seven years, showing the labour market is sustaining progress after the best annual performance in 15 years.
The 295,000 advance in payrolls last month followed a January increase of 239,000 that was smaller than previously reported, figures from the Labor Department showed on Friday in Washington.
The median forecast in a Bloomberg survey of economists called for a 235,000 increase. The unemployment rate fell from 5.7% while hourly earnings rose less than forecast.
The report underscores a lingering appetite among companies to boost headcounts as increased purchasing power from cheaper fuel supports consumer spending. A missing link continues to be faster wage growth that will be needed to ensure household purchases accelerate.
"There is solid momentum in the US labour market," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
"We feel comfortable that we are going to see a pickup in wage growth as firms have to attract and retain workers, given an improving economic backdrop."
Average hourly earnings rose 0.1% from the prior month after rising 0.5% in January, which was the most since November 2008. The median forecast called for a 0.2% gain.
Earnings were up 2% over the past year, also less than projected and matching the increase on average since the expansion began in mid-2009.
February marked the 12th straight month payrolls have increased by at least 200,000, the best run since a 19-month stretch that ended in March 1995. Payrolls rose 3.1 million in 2014, the most in 15 years.
The gain in February employment was led by stronger hiring in business services and leisure and hospitality, which include restaurants.
The drop in the jobless rate reflected both an increase in hiring and a decline in the number of people in the labour force. The participation rate, which indicates the share of working-age people working or looking for a job, decreased to 62.8% from 62.9% in January.