Like a plow horse, the progress in the labor market didn’t stop for bad weather in February. Nonfarm payrolls added 295,000 workers in February, the twelfth consecutive month with an increase north of 200,000. In the past year, payrolls have added 3.3 million new names, a pace of 275,000 per month.

In other good news, the unemployment rate fell to 5.5 percent, the lowest it’s been so far in the recovery. The drop in the jobless rate was mostly due to a decline in the labor force, and a tepid 96,000-person uptick in civilian employment (an alternative measure of jobs that includes small-business start-ups). While no one wants to see a drop in the labor force, February’s data are not an excuse to bemoan the trend in the labor market. The monthly data on civilian employment are volatile, and the labor force is up more than a million in the past year while the jobless rate has declined to 5.5 percent from 6.7 percent.

Due to the drop in the labor force, the participation rate ticked down to 62.8 percent in February, right around the level it’s been hovering at for the past eleven months. This is consistent with our view that growing cyclical strength in the labor market is finally offsetting the long-term trend of declining labor participation precipitated by population aging, overly generous student aid, and easily available disability benefits.

Overall, today’s report should continue to put pressure on the Federal Reserve to start raising short-term interest rates in June. Although average hourly earnings were up only 0.1 percent in February, they’re up 2 percent from a year ago, and total hours are up 3.3 percent. As a result, total cash earnings are up 5.3 percent from a year ago, which means consumers have plenty of fuel to increase spending. In addition, the share of voluntary job leavers (or “quitters”) among the unemployed hit 10.2 percent in February, the highest it’s been since 2008. In the past, Fed Chair Janet Yellen has said a higher quit rate is a sign of strength in the labor market.

Although the labor market is gathering strength relative to the current business cycle and the expansion of the previous decade, it still suffers from bad policies that are holding it back from improving even faster. Despite those policies, and little sign that they’ll be lifted any time soon, we continue to expect even more job growth, less unemployment, and faster wage growth in the year ahead.