-->WASHINGTON (Dow Jones)--U.S. employers slowed the pace of hiring last month
despite signs of strong economic growth, surprising Wall Street and validating
the fears of some Federal Reserve policymakers that the job market will not
recovery quickly.

Non-farm business payrolls grew by a net 21,000 in February, down from an
increase of 97,000 in January, the Labor Department said Friday. The
unemployment rate held steady at 5.6%, but another gauge showed the labor
market to be slacker than at anytime in the last 15 years: the labor-force
participation rate dropped to 65.9% amid a"steep" drop-off in the number of
men in the work force, the department said.

The report disappointed Wall Street. Economists surveyed by Dow Jones
Newswires and CNBC had called for payrolls to grow by 125,000 and the
unemployment rate to rise to 5.7%. But the numbers validated the Federal
Reserve's view that the recovery in the labor market will be gradual even if
the economy grows at an above-average pace.

The U.S. gross domestic product expanded by a robust 4.3% in 2003, and many
forecasters say the rate could reach 5% in 2004. But employers have yet to
start hiring workers at a 200,000-a-month pace that economists say is necessary
to replace the 2.3 million jobs lost since 2001 and find work for new entrants
into the labor market. Since August, non-farm payrolls have grown at an average
rate of just 60,700 a month.

Federal Reserve policymakers, under the circumstances, have said they're not
inclined to raise interest rates quickly in response to faster economic growth.
The Fed's key interest rate now stands at a 45-year low of 1%, and Fed Chairman
Alan Greenspan has said it eventually will have to rise. Many analysts say,
however, that the Fed cannot contemplate higher interest rates as long as the
pace of job creation remains below 150,000. The central bank, as a result,
isn't likely to raise rates this year, they say.

In its report Friday, the Labor Department revised its estimates of job
growth for January and December, saying employers added fewer jobs than
previously thought. Non-farm payrolls grew just 97,000 in January, down from
the initial estimate of a 112,000 gain. Payrolls growth was a mere 8,000 in
December, half the previous estimate.

In February, employers expanded payrolls a bit in most major categories
except construction and manufacturing and leisure and hospitality. Construction
payrolls declined by 24,000, partly reversing a 34,000 gain in January.
Manufacturing payrolls declined by 3,000, the smallest decline in more than a
year. Leisure and hospitality jobs fell for the first time since August,
dropping by 9,000.

But the service-providing industry added 46,000 jobs, fewer than the 77,000
jobs jobs that were added in January. That included a 10,000 increase in
professional and business-services jobs and a 13,000 increase in retail-trade
jobs.

The jobs growth coincided with a small increase in average hourly earnings,
which rose three cents to $15.52 in February. The average work week held steady
at 33 hours and 48 minutes.