Employers stepped up hiring in February, pushing the unemployment rate to a four year-low, suggesting the economy is gaining traction despite 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. The decline reflected gains in employment as well as people leaving the labor force.

The upbeat report was another sign of the economy’s fundamental health, which has already propelled the Dow Jones industrial average to record highs.

“This was a strong number and one of those rare cases where we were firing on all cylinders,” said Jacob Oubina, a senior U.S. economist at RBC Capital Markets in New York.

U.S. stock index futures and the dollar added to gains after the report, while interest rates on U.S. government bonds rose.

Although December and January’s employment data was revised to show 15,000 fewer jobs added than previously reported, details of the report were solid, with construction adding the most jobs since March 2007 and increased hours for all workers.

Job gains in February were well above the 195,000 monthly average for the three months to January.

The solid report offered hope the economy would be able to absorb the fiscal austerity.

A 2 percent payroll tax cut ended and tax rates went up for wealthy Americans on January 1. In addition, $85 billion in federal budget cuts that could slice as much as 0.6 percentage point from growth this year started on March 1.

FED STILL IN PLAY

But the pace of gains is still below the roughly 250,000 jobs per month over a sustained period that economists say is needed to significantly reduce unemployment. The Federal Reserve will likely maintain its very accommodative monetary policy.

“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 quantitative easing,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The U.S. central bank is buying $85 billion in bonds per month and has said it would keep up asset purchases until it sees a substantial improvement in the labor market outlook, a message that Fed Chairman Ben Bernanke drove home in congressional testimony last week.

Since the 2007-09 recession ended, the economy has struggled to grow above a 2 percent annual pace. In the fourth quarter, output barely expanded.

February’s employment report showed broad-based gains, with construction the star. The sector added 48,000 jobs and in January construction payrolls increased 25,000.

A decisive turnaround in the housing market and rebuilding on the East Coast after the destruction by Superstorm Sandy in late October is boosting jobs at construction sites.

Manufacturers stepped up hiring in February, although the pace was still well below early last year because of lackluster domestic demand and cooling growth overseas. Factory jobs increased 14,000 last month after rising 12,000 in January.

Retail employment increased 23,700 jobs, rising for an eighth straight month, and defying a recent slowdown in sales.

Healthcare and social assistance saw another month of solid job gains. The same was the case for leisure and hospitality.

Government continued to shed jobs, with payrolls dropping 10,000 last month after falling 21,000 in January.

The sustained steady job gains are lending some stability to wages. Average hourly earnings rose four cents last month. That was the fourth straight month of gains in hourly earnings.

They increased 2.1 percent in the 12 months through February after a similar advance in January.

The length of the average workweek increased to 34.5 hours from 34.4 hours in January.