US added 295,000 jobs in Feb vs. 240,000 est; unemployment rate at 5.5% vs. 5.6% est

February nonfarm payroll 295,000
Job surge! 295K jobs added in February   

Job creation boomed in February by 295,000 despite the brutal winter conditions, and the unemployment rate dropped to 5.5 percent, the Labor Department said Friday.

Despite the strong month, the picture was essentially the same for the American worker: Pay rose just 3 cents an hour, representing a 2.0 percent annualized gain as wage inflation remained elusive after a big jump in January. The average work week was unchanged at 34.6 hours.

Bars and restaurants represented the biggest growth area, adding 59,000 positions, while professional and business services grew by 51,000. Construction added 29,000 and health care increased 24,000.

The total actually represented a decline from the previous month, which was unrevised at 329,000. December's number fell from 239,000 to 257,000.

Analysts had been expecting the report to show U.S. employers added 240,000 jobs in February. Consensus estimates also saw the unemployment rate ticking down to 5.6 percent from January's 5.7 percent. Job creation had been averaging 266,000 over the previous 12 months.

"The upside surprise should no longer be a surprise because, despite what many pessimists wish to believe, the economy is expanding at a healthy clip and creating high variety jobs again," said Todd Schoenberger at LandColt Capital.

Bicycle Corporation of America workers jobs
Randall Hill | Reuters

A broader measure of unemployment that includes those who have stopped looking as well as those working part-time for economic reasons—the underemployed—fell from 11.3 percent to 11.0 percent. The headline rate fell to its lowest level since May 2008.

The labor force participation rate, after gaining in January, fell one-tenth to 62.8 percent, which is just off the lowest level since 1978. The continued sharp decline of the rate has been a contributor toward the decline of the headline number, which peaked at 10 percent in 2009.

Full-time jobs increased by 123,000 while part-time positions declined by 75,000. Total employment increased y 96,000 while the ranks of the unemployed dropped 274,000.

Stocks showed little reaction to the report, with futures indicating a mildly negative open on Wall Street. The dollar rose against the euro, while government bond yields were higher, with the benchmark 10-year Treasury note near 2.18 percent.

Investors will be left to digest what the strong headline numbers will do for monetary policy. The Federal Reserve is expected to increase rates later this year, with employment and inflation targets key. While job creation continued apace, the low level of wage inflation could give the Fed reason to keep rates near zero.

Jim Paulsen, chief market strategist at Wells Capital Management, said the current pace of unemployment is trending below 5 percent, putting pressure on the Fed to move.

"I just can't imagine a Federal Reserve in this country arguing that we should have a zero interest rate structure when we have a sub-5 percent unemployment rate, or on the doorstep," Paulsen told CNBC.

Get the market reaction here.