NEW YORK (CNN/Money) - The monthly job report gave investors and policy-makers reason to celebrate rather than worry for a change Friday as the pace of hiring finally showed signs of picking up.

The economy created 262,000 jobs in February, almost twice the January gain, which was revised to an increase of 132,000 jobs, the Labor Department reported.

It was only the second time job growth has reached the quarter-million mark in the last nine months, and the second time during that period that payroll growth did not trail economists' forecasts.

This month economists proved to be too conservative for a change. Those surveyed by Briefing.com had forecast a gain of 225,000, although some Wall Street traders had been looking for an even higher number. Still, after months of sluggish job growth, the report was a relief.

"It certainly too soon to be sure, but I think it's a very strong indication that hiring is getting on track," said Bill Cheney, chief economist for John Hancock. With the economy growing at a rapid clip, it's about time hiring is finally showing solid gains, he said.

"This is the kind of pace of job creation one would expect with 4 percent GDP growth," he said. "This number shouldn't have been a surprise. I think the surprise is the last three months." Gross domestic product, or GDP, is the broadest measure of the nation's economy.

The unemployment rate, which is based on a separate survey of households, edged up to 5.4 percent from 5.2 percent in January, showing a drop in employment. But economists widely regard the employer survey as the more accurate barometer of job creation.

Even the higher unemployment rate was taken as a positive by some economists, who said it was a sign that employers will be able to find the workers they need to support future hiring plans.

"It's one of those rare Goldilocks reports," said Steven Wieting, senior economist at Citigroup -- a reading that is considered neither too hot nor too cold by economists. "The idea here that there is still potential slack, the pool of available labor."

Still, some economists said the outlook for job growth is not nearly as strong as the payroll gain in this report would suggest.

"We caution investors; one month of stellar job creation does not a trend make. And since the entire Street has diminished economic growth projections for 2005, we have to stick to our guns of slower, not stronger, job creation in coming months," said Richard Yamarone, director of economic research for Argus Research.

There were other signs in the report that the job market may still have a ways to go. Average weekly and hourly wages were unchanged from January and there was no increase in the average hourly work week.

While these aren't welcome signs for workers, they were good news for investors, showing little inflationary pressure in the job market despite the pickup in hiring.

On Wall Street, the Dow Jones industrial average jumped to its highest level in 3-1/2 years after the report.

And bond prices, surprisingly, rose as well, driving the yield on the 10-year Treasury lower as investors bet the strong job report probably wouldn't force the Federal Reserve to raise interest rates more aggressively.

"This report was very encouraging. It gives us stronger employment growth than the market was expecting while none of negative side effects of economic growth are present, such as higher inflationary pressure from wages," said Anthony Chan, senior economist for JPMorgan Fleming Asset Management.

For more on the outlook for the job market this year, click here.