U.S. job growth accelerates, weather cuts into hours worked

By Lucia Mutikani

WASHINGTON (Reuters) - U.S. job growth rose more than expected in February, which could ease fears of an abrupt slowdown in economic growth and keep the Federal Reserve on track in reducing its monetary stimulus.

Employers added 175,000 jobs to their payrolls last month after creating 129,000 new positions in January, the Labor Department said on Friday. The unemployment rate, however, rose to 6.7 percent from a five-year low of 6.6 percent.

Economists polled by Reuters had expected nonfarm payrolls to rise 149,000 and the unemployment rate to hold steady at 6.6 percent.

Unseasonably cold and snowy winter weather has disrupted economic activity. Snow and ice covered densely populated areas during the week employers were surveyed for February payrolls.

The length of the average work week in February fell to its lowest level since January 2011.

The smaller survey of households from which the jobless rate is derived showed 601,000 people with jobs stayed at home because of the bad weather. The was the highest reading for the month of February since 2010.

Fed officials, including Chair Janet Yellen, have viewed the recent weakness in payrolls, which has been replicated in data such as retail sales, industrial production and home building, as largely weather-related and temporary.

On Thursday, New York Fed President William Dudley reiterated that the economic outlook would have to change significantly for the U.S. central bank to wind down its monthly bond purchases in a series of measured steps this year.

Most economists expect the Fed will announce further cuts in its stimulus at its next meeting on March 18-19.

But the weather is not the only factor behind the lull in activity.

Businesses are working through a huge pile of unsold goods accumulated in the second half of 2013, which means they have no incentive to place new orders with manufacturers.

In addition, the expiration of long-term unemployment benefits for more than one million Americans in December and cuts to food stamps are also hurting spending.

These factors are, however, temporary and the economy should bounce back in the months ahead.

The survey of households from which the jobless rate is derived showed a rise in the number of people without jobs, which accounted for the rise last month. The labor force participation rate was steady at 63 percent.

Job gains last month were almost broad-based, with private sector payrolls rising 162,000 and government adding 13,000 jobs. Manufacturing saw a seventh straight month of gains in employment. It added 6,000 jobs, the same as in January.

Construction payrolls, which surprised in January by logging hefty gains, increased 15,000 last month.

Average hourly earnings rose nine cents in February. The length of the workweek fell to an average of 34.2 hours from 34.3 hours, likely because of the severe weather.

(Reporting by Lucia Mutikani; Editing by Paul Simao)