WRAPUP 1-Solid US jobs growth seen in Feb, jobless rate up

* Payrolls seen up 185,000, private jobs up 190,000

* Jobless rate seen rising to 9.1 percent from 9 percent

* Average work week seen rising to 34.3 hours, earnings up

By Lucia Mutikani

WASHINGTON, March 4 (Reuters) – U.S. employment likely grew
solidly in February after being dampened by harsh weather,
which would bolster views the recovery has entered a
self-supporting phase.

Nonfarm payrolls increased 185,000, according to a Reuters
survey, after a measly 36,000 jobs in January.

February’s anticipated gains would be the largest since
May, when payrolls were boosted by government hiring for the
2010 decennial census. Still, they would not be so large as to
steer the Federal Reserve away from its easy policy stance.

The Labor Department will release the closely watched
employment report at 8:30 a.m. EST (1330 GMT).

“We have moved into the expansion phase of the economic
cycle and the economy is self-sustaining,” said Brian Levitt,
an economist at OppenheimerFunds in New York.

U.S. payrolls in recent months have tended to fall far
short of economists’ expectations, even though several labor
market indicators — including weekly data on initial claims
for jobless benefits and employment measures in surveys by the
Institute of Supply Management — have pointed to a quickening
pace of job creation.

Analysts, however, are increasingly convinced a foundation
is now firmly in place for solid job growth going forward.

“Businesses are actually beginning to realize that they
need to hire more aggressively because we do think demand is
going to continue strengthening through out the year,” said
Ryan Sweet, a senior economist at Moody’s Analytics in West
Chester, Pennsylvania.

Despite the anticipated bounce in payrolls, the
unemployment rate is seen ticking up to 9.1 percent from 9.0
percent in January as discouraged jobseekers return to the
labor force, a sign of confidence in the economy.

The jobless rate has dropped 0.8 percentage point since
November, the biggest two-month decline since 1958. It is
derived from a survey of households, while the job creation
figure comes from a survey of employers.

The poll, taken last week, may not fully capture the
growing sense of optimism among economists. Encouraging reports
this week have led some economists to revise their forecasts


The unemployment rate is being closely watched by the Fed
and could well determine the timing of the U.S. central bank’s
first interest rate hike. The Fed, which meets on March 15, has
held overnight lending rates near zero since December 2008.

Economists believe the Fed will want to see payroll gains
in excess of 200,000 for at least six to nine months and a
significant decline in unemployment before starting to withdraw
its massive monetary support from the economy.

“If we start to add enough jobs, sufficient to lower the
unemployment rate, I think the Fed will feel a little more
comfortable in easing off the throttle,” said Sweet.

“But right now, the economy is still fragile. There are a
number of potholes that we can hit and the Fed is not going to
want to act on exiting any time soon.”

A surge in crude oil prices above $100 a barrel due to
turmoil in the Middle East and North Africa represent a
headwind for the economy.

But Fed Chairman Ben Bernanke this week said high oil
prices were unlikely to steal much from growth or spark broader
inflation, unless they were sustained. For details see

With the jobless rate far from the 5 percent to 6 percent
level that most officials think can be sustained without
igniting inflationary wage pressures, and with inflation still
short of the Fed’s target of close to 2 percent, analysts
expect the U.S. central bank to complete its $600 billion
government bond-buying program to help the economy.

“We don’t see anything on the near-term horizon that would
alter that view, we don’t see them falling short,” said Michael
Gapen, an economist at Barclays Capital in New York.

As in previous months, the private sector is expected to
account for all the anticipated job gains in February, with an
addition of 190,000 positions. That would be up from 50,000 in

Employment in the private service sector pulled back in
January and is expected to show solid growth in February.

Payrolls in the goods-producing industries should see a
weather-related bounce, with construction recouping some of the
32,000 jobs lost in January. Strong gains are expected in
manufacturing, a sector that is powering the recovery.

Government employment probably contracted for a fourth
straight month, pulled down by state and local governments,
which are under heavy budgetary pressures.

The average work week is also expected to edge up after
severe weather shortened working hours. Average hourly earnings
are expected to increase at a slower pace than in January.