WRAPUP 6-U.S. employment rebounds from winter gloom

* Payrolls rise 192,000, private jobs up 222,000

* Jobless rate dips to 8.9 percent from 9 percent

* Average workweek steady at 34.2 hours, earnings edge up
(Updates markets to late afternoon)

By Lucia Mutikani

WASHINGTON, March 4 (Reuters) – U.S. employers hired
workers at the fastest pace in nine months in February and the
jobless rate slipped to a nearly two-year low of 8.9 percent,
showing the economy is finally kicking into a higher gear.

Nonfarm payrolls increased 192,000, the Labor Department
said on Friday, partly bouncing back from a weather-depressed
January as private employers hired 222,000 workers, the most
since April. The gains were broadly in line with expectations.

Employment rose pretty much across the board — from
factories to construction to most service industries. The loss
of 30,000 state and local government jobs was an exception.

“It’s belated evidence the expansion is finally beginning
to make a dent in the jobs problem that the country has,” said
Patrick O’Keefe, head of Economic Research at J.H. Cohn in
Roseland, New Jersey. “It’s encouraging but it also highlights
how far we have to go to regain our footing.”

Until February, the government’s employment gauge had
largely underperformed other labor market indicators that had
indicated an acceleration in the pace of job creation.

While Federal Reserve officials, who meet on March 15, will
likely welcome the sturdy report, they probably will still
regard the pace of job creation as too slow to warrant a change
to the U.S. central bank’s ultra-easy monetary policies.

The unemployment rate, which stood at 9 percent in January,
has dropped 0.9 percentage point over the past three months.
The latest drop, which confounded economists’ forecasts for a
rise to 9.1 percent, came even as some discouraged workers
resumed the job hunt.

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LINKS FOR PAYROLLS DATA:

INSTANTVIEW: [ID:nN04164528]

SNAP ANALYSIS: [ID:nN04292473]

BREAKINGVIEWS [ID:nN04169801]

Reuters insider: http://link.reuters.com/jed48r

Graphic – US payrolls: http://r.reuters.com/gud48r

Graphic – US unemployment: http://r.reuters.com/kud48r

Graphic – Participation rate: http://r.reuters.com/cyd48r

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UPBEAT TENOR

Despite the report’s relative strength, some investors were
disappointed as they had anticipated an even bigger hiring
gain. That disappointment and rising crude oil prices as
clashes in Libya intensified helped to push U.S. stocks down,
giving up the previous day’s hefty gains.

Prices for U.S. government debt recouped some of Thursday’s
losses, while the dollar fell to a four-month low against a
basket of currencies.

Contributing to the upbeat tenor of the report, the
department said 58,000 more jobs were created in December and
January than previously estimated.

“Unless the shock from the Middle East worsens, an
important caveat, an underlying acceleration in payroll growth
is on the way,” said Nigel Gault, chief U.S. economist at IHS
Global Insight in Lexington, Massachusetts.

Though the economy has grown for six straight quarters and
continues to show signs of gathering momentum, only a fraction
of the more than 8 million jobs lost during the recession have
been recovered.

Fed officials are closely watching the labor market and the
unemployment rate could well determine the timing of their
first interest rate hike. The central bank 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.

Many Fed officials think the jobless rate could be pushed
to the 5-6 percent range without generating inflationary wage
gains. The employment report showed average hourly earnings
rose just one cent last month and were up a relatively slim 1.7
percent over the past year.

With ample slack still in the labor market, analysts expect
the Fed to complete its $600 billion government bond-buying
program, which is aimed at helping spur stronger growth. The
program is due to wrap up in June.

“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 Ryan Sweet, a
senior economist at Moody’s Analytics in West Chester,
Pennsylvania.

“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.”

(Editing by Andrea Ricci and Diane Craft)