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Caveats for sure, but U.S. jobs recovery under way

U.S. employers added 227,000 jobs in February to complete three of the best months of hiring since the recession began.

Damian Dovarganes/Damian Dovarganes/Associated Press

How good are the latest jobs numbers? So good that Republican House Speaker John Boehner had no choice but acknowledge as much.

"Today's report provides some encouragement for millions of families and small businesses who continue to struggle in this economy, but unemployment remains far too high," Mr. Boehner said in a statement. "It is a testament to the hard work and entrepreneurship of the American people that they are creating any jobs in the midst of the onslaught of anti-business policies coming from this administration."

American employers now have created more than 200,000 jobs for three consecutive months for only the third time in the past 10 years.

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The 227,000 gain in February was slightly ahead of Wall Street expectations, and a significant revision to the previous month makes the 284,000 increase in January the second-biggest jump since the recession ended in 2009.

The labour participation rate jumped to 63.9 per cent from 63.7 per cent in January, suggesting Americans are feeling better about their chances of getting job. Yet the unemployment rate held at 8.3 per cent, as the economy created enough jobs to offset the jump in job seekers.

All the provisos about the U.S. recovery remain.

It's a long way from 8.3 per cent to the roughly 5.5 per cent unemployment rate that the Federal Reserve believes is consistent with the economy's potential. Rising oil prices and volatility in Europe could snuff out the economic expansion, just as they did last spring. Record numbers of people have been unemployed for longer than six months, representing not only an economic drag, but a societal problem.

But here's another proviso: the headline jobs number might be understating the economy's strength.

The U.S. jobs data are derived from two surveys. The jobs number comes from a review of company payrolls, while the unemployment is produced by a poll of households. The payrolls report is the preferred gauge of hiring because it's more reliable. But there are moments when this survey understates the trend. This could be one.

The household survey reports that 428,000 people found jobs in February, compared with an astounding 847,000 in January. Over the three months since December, the average is almost 484,000 – about double the average of the payrolls survey over the same period. According to Sal Guatieri at BMO Nesbitt Burns in Toronto, the household report says 2.6 million jobs have been created in the seven months through February, the most in a dozen years and double the establishment survey.

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Austin Goolsbee, an economics professor at the University of Chicago and the former head of President Barack Obama's Council of Economic Advisers, says the gap between the two reports is telling us something.

When the household survey gets way ahead of the employer survey, it suggests people are finding work with smaller companies and new enterprises that the Bureau of Labor Statistics misses in its payrolls report.

"That's a good sign," Mr. Goolsbee said Friday on CNN.

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