WASHINGTON — The U.S. economy last month turned in another stellar performance of job growth with little inflation, the Labor Department said Friday in a report that propelled the stock market to an all-time high and suggested that the Federal Reserve will not raise interest rates in the near future.
The economy added 275,000 payroll jobs in February, paced by strong advances in retail and construction, while average hourly wages edged up just a penny, according to the report. The unemployment rate remained exceptionally low, meanwhile, creeping up to 4.4% from 4.3%.
"We're doing great," declared Brian S. Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson, an investment bank in Chicago. "The economy is in that most miraculous of places, which is strong growth with no inflation, and this report clearly shows it."
The stock and bond markets skyrocketed on the news, with the Dow Jones industrial average rallying 268.68 points to close at 9,736.08, the loftiest finish ever. Bond prices rose and interest rates dropped, reflecting a dramatic decline in fears about inflation. Interest rates on the benchmark 30-year Treasury bond slid to 5.60% from 5.69% on the news.
But despite such euphoria, the report was not universally favorable: It highlighted continuing injury to U.S. manufacturing, which shed 50,000 jobs last month, largely in response to ongoing woes overseas.
"I think, in truth, what's going on is that the factory sector is still struggling," said James Glassman, senior U.S. economist at Chase Securities in New York. ". . . There's nothing to show that factories are on the mend."
Still, the problems in manufacturing were overshadowed by a larger theme of job growth with no hint of spiraling labor costs. Many analysts expect U.S. economic growth to moderate this year from the buoyant 3.9% pace of 1998. Yet forecasters increasingly have been revising their predictions upward, amid a stream of upbeat evidence that the economy continues to cruise forward.
Friday's report was seen as reinforcing the argument of economic health, with the 275,000-job gain exceeding expectations and following a revised 217,000 increase for January.
In addition, the Federal Reserve on Friday released data showing that consumers in January embarked on the largest spree of credit purchasing in three years.
