Economy adds 295,000 jobs in February; unemployment at lowest level in 7 years

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WASHINGTON -- The winter weather didn't cool the job market in February.

The U.S. economy added 295,000 jobs in February, which crushed expectations. That beat the estimate from CNNMoney's survey of economists, who predicted 235,000 job gains.

February's job growth shows how far the economy has come in a year. It's the 12th straight month that the economy has gained over 200,000 jobs, and the unemployment rate fell to 5.5 percent.

That's the lowest unemployment rate since May 2008 -- before the financial crisis. Unemployment has come a long way from a year ago when it was 6.7 percent.

As more Americans return to work, the question now is when will wages pick up. Average weekly wages only rose 2 percent in February compared to a year ago. In a healthy economy, wages gains are between 3.5 percent and 4 percent. The snail-pace wage gains are a key reason why many folks still aren't feeling off better during this recovery.

What's ahead: Wages are quickly becoming the focal point for the economy's health. The Federal Reserve wants to see better wage growth before it raises its key interest rate, which will have a big impact on the economy and markets.

If job growth continues, wages should speed up too, many economists argue. But February's jobs report told the same tale: excellent job gains in recent months with lackluster wage growth.

Job gains were across the board in retail, health care, and business services.

Retail businesses added 32,000 jobs last month, continuing their role as leaders in the job growth pact. On the downside, retail tends to have a higher concentration of low-wage jobs than other sectors.

One warning sign is that energy companies are cutting back employment because of low oil prices. Energy jobs fell for a second straight month in February, although the drop was modest. The energy sector has high-paying jobs, and it played a big role in job growth during the recovery.

Many economists say falling oil and gas prices are positive the economy, but it's unclear what sector will carry the job growth baton if energy doesn't.

One solution could be health care. It had another strong month, gaining 24,000 jobs. Obamacare has undoubtedly driven some of that job progress. But there's a jobs caveat to Obamacare: many employers are trying to cut back hours on part-time employees so they don't have to offer them health insurance.

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