Employers stepped up hiring in February, pushing the unemployment rate to a four year-low and suggesting the economy has enough momentum to withstand the blow from higher taxes and deep government spending cuts.

Nonfarm payrolls surged 236,000 jobs last month, the Labor Department said on Friday, handily beating economists' expectations for a gain of 160,000.

The jobless rate fell to 7.7 percent, the lowest since December 2008, from 7.9 percent in January.

COMMENTS:

DARRELL CRONK, REGIONAL CHIEF INVESTMENT OFFICER FOR WELLS FARGO PRIVATE BANK IN NEW YORK:

"The other thing that is interesting is that it is taking a little bit of this argument off the table that the Fed is doing all the heavy lifting in the economy - the only reason the stock market is going higher is because the Fed is involved into pushing everybody into more risk assets. The reality is not just this jobs data, but we've seen it through the initial jobless claims, the ADP report, the ISM numbers, there is a trend building in the economic data that while not off the charts great is definitely moving in the right direction.

On early removal of QE: "Doubt it. I don't think they do - the Fed is still very dovish. Bernanke in his latest comments have not given any indications. His vice chair, Janet Yellen, is even more dovish than Bernanke and a couple of the core governors that really carry the weight on the Fed are all leaning to the dovish side. I don't think this changes the dynamic of QE and where things are at today. Remember, we had consistently been in the mid-to-upper 100,000 jobs gains which is just kind of mediocre. So while this is a great month in February we need to see this pattern play through for a couple of months before it would start to change the Fed's opinion.

"Candidly, we have to watch March and April data because that is where we will start to see any effect of sequester. I don't think by any means puts us out of the woods even though it is a great report, there are still some headwinds coming in the form of sequester."

ELLEN ZENTNER, SENIOR U.S. ECONOMIST, NOMURA SECURITIES, NEW YORK:

"No, it's not anything that goes to change perspectives, and particularly the Fed's perspective. The average over the past two months is marginally better than the 12-month moving average, but not enough to move the needle.

"This number for February essentially expresses a labor market that continues to move sideways at a frustratingly slow trend for the Fed. The unemployment rate ticked down more than expected, but more than half of that decline was because of a drop in the labor force participation rate.

"There are very specific indicators within the employment report that both Yellen and Bernanke said they watch in terms of gauging improvement in the labor market, and all but one deteriorated in February.

"This is not a report that is going to inspire any kind of change in monetary policy, it is certainly not going to inspire any kind of discussion around this stellar job report that make them decide to end QE earlier than expected. There is nothing in here that is going to be inspiring for the March meeting.

JASON CONIBEAR, TRADING DIRECTOR AT FOREX SPECIALISTS, CAMBRIDGE MERCANTILE, TORONTO:

"The US economy just hit it out of the park. The February non-farm payrolls data was expected to show the economy moving forward slowly but surely, not fast-forward like this. These numbers will ignite the US Dollar and next week could see it make considerable gains against both the euro and pound.

"One month does not a recovery make but this will give hope to the markets that the US economy is finally awakening from its slumber. It also suggests that the US economy will be able to capacitate the double whammy of government spending cuts and higher taxes, which is good news for the rest of the global economy.

DARRELL CRONK, REGIONAL CHIEF INVESTMENT OFFICER FOR WELLS FARGO PRIVATE BANK IN NEW YORK:

"Great report. There just isn't anything that I can pull out negative at all about this report. Probably the only thing that is potentially negative is we had some net revisions down in the month of January by about 38,000, although most of that was government jobs.

The positives for me was we blew through consensus to the upside. The big positive is the private sector, we created 246,000 new jobs in the private sector, which is exceptional and when you break that down between all the industries - whether it is professional business, construction, health, retail, they all gained in the month of February which we haven't seen in quite awhile either. My takeaway is it certainly confirms the economy is improving and on a healthier course."

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

"The report was strong in almost every dimension. But there have been several false dawns in the early part of the year for several years so there will be caution about drawing conclusions, but pressure on the Fed to step up the pace of easing is quashed at least for a while.

"It would make sense for the economy to be pulling itself together now because a lot of the excesses have been worked out and there has been a lot of time for healing. Some of the political uncertainty has been cleared away and the Fed has been very easy for a very long time."

PAUL ASHWORTH CHIEF US ECONOMIST CAPITAL ECONOMICS TORONTO:

"February's Employment Report isn't a game changer, but it adds to the evidence from the upbeat ISM surveys released earlier this week that, despite the expiry of the payroll tax cut, higher gasoline prices and government spending cuts, the recovery is gathering momentum. Non-farm payroll employment increased by a better than expected 236,000 in February, up from a 119,000 increase the month before.

"Construction employment increased by a big 48,000. Some of this may be weather-related (the number of people not working because of the weather was a little below the seasonal average last month) but construction employment has now been increasing at a healthy pace for five months, suggesting it is mostly a reflection of the rebound in homebuilding."

JOHN KILDUFF, PARTNER, AGAIN CAPITAL LLC IN NEW YORK:

"The employment report showed solid gains, even factoring in the decline in the participation rate and the downward revisions to January.

"It appears good enough to further the equity market rally and the dollar. Perversely, the strengthening dollar will limit gains in crude oil, due to the inverse correlation.

"The report confirms solid gains in gasoline demand, recently, that shows an increase in drivers going to new jobs. The increase in demand for all categories should continue, as the employment picture continues to improve."

RUSSELL T PRICE, SENIOR ECONOMIST, AMERIPRISE FINANCIAL SERVICES INC, TROY, MICHIGAN:

"It was quite clearly surprising to the upside. I was prepared for people to be a little bit disappointed. I expected things to come in right around that 170 level.

"In the second half of last year businesses were very cautious to hire ahead of the fiscal cliff. Now that issue is largely behind us and there seems to be more cooperation in Washington. There's a sense of relief that the economy can finally start to gain some traction."

THOMAS SIMONS, MONEY MARKET ECONOMIST, JEFFERIES & CO., NEW YORK:

"In the payrolls survey, even with the downward revisions to last month, this is still very solid data and stronger than expected. Part of the jump in payrolls this month resulted from a 48,000 boost to construction payrolls. The 0.2 percent rise in average hourly earnings still leaves the year over year increase at just 2.1 percent, near the bottom of the range for the cycle.

"In the household survey the decline in the unemployment rate is not consistent with the underlying data as employment - according to the household survey - rose 170,000 and unemployment rose even more (300,000). This data is a testament to the power of the participation rate and so long as it continues to trend lower, the unemployment rate will continue to trend lower."

CRAIG DISMUKE, CHIEF ECONOMIC STRATEGIST, VINING SPARKS, MEMPHIS, TENNESSEE:

"It's big. It is a very positive report. To me the pace of job growth in the past two years has been stronger than what we had thought. If we see a 200,000 job growth carry over to the second quarter, that would cause more market discussion on the Fed's appetite to buy more bonds. This report could be strong enough to hurt stock prices because it brings into question about the Fed's asset purchases."

MICHAEL POND, HEAD OF GLOBAL INFLATION MARKET RESEARCH, BARCLAYS, NEW YORK:

"People will give things a deep think after this report. This happens to be juxtaposed against (St. Louis Fed President) Bullard's recent comments, who said it will be a while before QE ends. Of course, today's number bolsters the case that the labor market is stronger than expected. This was a strong report all around even with the downward revisions. The hours worked ticked up, too. A small move there is meaningful. So we could see a knee-jerk continued selloff in rates, though we don't think this is the start of a broader selloff."

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON

"It's a little too soon to say this means the end of QE. You never want to put too much emphasis on a single number. But this is a blowout number, even with the slight downward revisions. It is likely to at least add to the nascent talk of an earlier-than-expected exit from QE. I think the stock market will like this number, and the dollar-yen is finding a lot of support. We're in a sweet spot of sorts with the data showing a more robust recovery, which supports stocks and the dollar, yet not quite strong enough to declare an end to QE."

JACOB OUBINA, SENIOR U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:

"An across the board strong report. The strong revision on the private side the previous month was not even close to offsetting this report. The decline in the unemployment rate and earnings came in line with what was expected."

"This was a strong number and one of those rare cases where we were firing on all cylinders. Having said that this will likely not mean much for Fed policy as they will need to see more than one month of strong numbers and if it is sustained."

TERRY SHEEHAN, ECONOMIC ANALYST, STONE & MCCARTHY RESEARCH ASSOCIATES, PRINCETON, NEW JERSEY:

"There's a lot to like in this report. The 7.7 percent unemployment rate reflects a nice drop in unemployment. The 236,000 growth in payroll jobs tops almost all forecasts. The growth appears to have been concentrated in construction, trade and transportation, retail and professional and business services, which includes temporary help. We think the gain in construction is real. Average weekly hours notched up a bit as well. The main trends are all moving in the right direction."

JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDEMARKETS, WOODCLIFF LAKE, NEW JERSEY:

"Progress in the labor market is unmistakable. The economy is producing more than twice as many jobs as it did at the low point in the second quarter of last year, but optimism is relative. Wages and salaries are losing out to inflation. The key is faster growth. The current below 2.0 percent economy cannot create enough jobs to bring down unemployment. The equity rally will be aided by the improving labor economy and the dollar should find firm support in the good jobs numbers."

MARKET REACTION:

STOCKS: U.S. stock index futures added to gains

BONDS: U.S. bond prices added to losses. The benchmark 10-year note fell 20/32 to yield 2.063 percent after the data. The 30-year bond dropped 1-06/32 to yield 3.264 percent.

FOREX: The euro was last down 0.6 percent at $1.3031. The dollar also gained against the yen, climbing as high as 96.54, a fresh 3-1/2-year high. It was last at 96.35 yen, up 1.7 percent. OIL: Brent crude held most losses and U.S. crude futures pared losses in choppy trading. Brent April crude was down $1.31 at $109.84 a barrel at 8:37 a.m. EST (1337 GMT), having traded from $109.14 to $111.33.

GRAPHIC

The jobless rate fell to 7.7 percent in February. However, the percentage of unemployed who have been out of work 27 weeks or longer rose to 40.2 percent and the average unemployment duration increased to 36.9 weeks. http://link.reuters.com/ram54t

(Americas Economics and Markets Desk; +1-646 223-6300)