WASHINGTON, March 10: US employers added 97,000 jobs in February, new data showed on Friday, suggesting the world's biggest economy is chugging along despite weakness in the housing and auto sectors.The Labour Department figure on nonfarm payrolls, seen as one of the best indicators of economic activity, was in line with Wall Street expectations and was the weakest since January 2005.

But the agency revised upward its estimates for January to show 146,000 new jobs instead of 111,000 and 226,000 in December from 206,000.

The unemployment rate, taken from a separate survey of households, dipped to 4.5 per cent of the active population from 4.6 percent.

“Despite the slowing trend in job growth, with the upward revisions to earlier months, the US economy continues to generate solid gains in employment, said Paul Ferly, economist at BMO Capital Markets.

Such will provide some needed offset to the ongoing correction in the housing market and help temper concerns about the US economy slipping into recession. Beata Caranci, senior economist at TD Bank Financial Group, said the report was consistent with forecasts of an economy that is decelerating but maintaining modest growth.

If you look at just the private sector, there were only 58,000 jobs, which is not that strong, she said.

But this is somewhat of a relief because expectations were being ratcheted down. It provides some comfort the job market remains strong. The report reflected a 62,000 drop in construction jobs, the sector's sharpest decline since 1991. February saw unusually cold weather, but analysts noted the weak housing market was a major factor.

Springtime would normally be a time of large construction job gains, said economist Stephen Gallagher at Societe Generale.

Those job opportunities will not materialize this year. As such, there will be greater displacement of construction workers.Offsetting those losses, the service sector added 168,000 jobs and government payrolls rose by 39,000.

Average hourly wages, a key measure of inflation, rose 0.4 per cent in February to $17.16.

The report appeared to be in line with forecasts from the Federal Reserve and many private analysts for an economy that is still growing, albeit more slowly.

The Commerce Department last month made a sharp downward revision to gross domestic product (GDP) growth in the fourth quarter of 2006, to 2.2 percent from an earlier estimate of 3.5 percent.

Other government data released Friday showed the US trade deficit narrowed 3.8 percent to 59.1 billion dollars in January, which analysts said should help first-quarter GDP.

The Fed predicts GDP growth in a range of 2.5 to 3.0 per cent for 2007.

Based on these expectations, the Fed has held its base interest rate at 5.25 per cent since August.

The (payrolls) report gives no reason for the Fed to do anything but stick with its extended hold on interest rates, Brian Bethune of the consultancy Global Insight said.

Gallagher at Societe Generale said: “Overall, employment trends remain well above our worst fears and do not pressure the Fed to make early rate cuts. Analysts say the US economy needs to generate between 110,000 and 130,000 jobs each month to absorb new entrants to the labour market. But because monthly figures can be uneven, most economists look to a longer-term trend.

Labour Department officials said that nonfarm payrolls have grown by two million over the past 12 months.

Employment gains -- up an average of 156,000 per month over the last three months -- suggest forward momentum for the economy but at a pace below our estimate of trend growth, said John Silvia, chief economist at Wachovia Securities.

We're waiting for the troubles in housing and manufacturing to spread to the broader economy, said Avery Shenfeld at CIBC World Markets.—AFP