The United States added 151,000 jobs in February as employers in a range of industries continued making hires, while the federal government slashed its workforce by 10,000.
The fresh employment data reported Friday by the Bureau of Labor Statistics missed expectations for 170,000 new roles, but last month's job gains exceeded the revised 125,000 posted in January. The unemployment rate climbed slightly to 4.1% from 4.0% the month before.
The BLS data painted a mixed picture of the labor market. Health care employers added 52,000 roles in February, financial services firms added 21,000, and transportation and warehousing companies added 18,000. But Friday's report may not fully capture the extent of President Donald Trump's sweeping policy changes.
"The survey period for this report is around the 12th of the month," Mark Hamrick, Bankrate senior economic analyst, said in a statement Friday. "Much has happened since then," he said, nodding to the 62,000 federal job cut announcements flagged Thursday by the consultancy Challenger, Gray & Christmas.
Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, all but dismissed the BLS report as “a snapshot of a prior age, before the shift in federal government policies undermined confidence.”
Still, analysts broadly sounded a note of measured relief.
"There were fears that today’s jobs report would reveal some deeply unsettling news around the health of the labor market," Seema Shah, chief global strategist at Principal Asset Management, said in a statement Friday. "Yet, while the worst fears were not met, the report does confirm that the labor market is cooling."
The sharp decline in government roles, which comes as Elon Musk’s Department of Government Efficiency effort pursues deep cuts to the federal workforce, more than wiped out the 5,000 jobs added there in January. It's the first time that federal employment has fallen since June 2022.
Some Wall Street firms have estimated the potential job losses triggered by DOGE could ultimately total 500,000, though Barclays analysts have argued that the broader economic impact may be limited. Federal payrolls account for just 1.5% of overall jobs, and even knock-on effects to contractors wouldn’t dramatically alter the labor market picture, they said.
The number of people working part time for economic reasons swelled by 460,000 to hit 4.9 million, the highest level since the pandemic, the BLS found. At the same time, the number of “discouraged” workers — those who want jobs but believe none are currently within reach — shrank by 128,000.
Less than two full months into office, Trump has whipped up storm clouds for the otherwise solid economy he inherited, promising to overhaul it to address voters’ widespread discontent.
Wall Street traders and analysts have increasingly sounded alarms about the impact of policy uncertainty on the economy. But market reaction to Friday's report was relatively muted. Stocks are likely to close down for the week, having fully erased the gains accrued since Trump won re-election in November.
“We are likely to see some headwinds as we move through the year,” Sarah House, Wells Fargo senior economist, said Thursday ahead of the BLS report. “It’s not just tariffs we’re contending with but also slower immigration. That’s going to affect labor force growth, and then we now have pretty aggressive efforts to curtail government spending.”
Consumer confidence has taken a downturn as households shift more focus from spending toward saving. Meanwhile, the combination of Trump’s still-evolving tariff agenda and the massive job cuts sought by Musk, his multibillionaire adviser, have raised the twin specters of higher unemployment and higher prices, with increasing invocations of stagflation.
In the run-up to Friday’s BLS numbers, two unofficial reports showed a job market that was throttling back: Job cut announcements in February reached their highest one-month level since the depths of the pandemic in mid-2020, the Challenger report found.
Earlier this week, the private sector payrolls processor ADP tallied 77,000 net gains in February, far fewer than the 148,000 forecast. The decline included recent tech layoffs in the information services sector and losses in education and health services — jobs that often rely on federal grants.
“Here you might see some uncertainty as policies are being digested and assessed,” Nela Richardson, ADP chief economist, said in a call with reporters Wednesday. “We don’t know exactly what this represents, but we are seeing a measurable decline in hiring in key sectors of the economy.”
With uncertainty rising, major retailers warn that they’re likely to ask customers to pay for some of the cost increases from Trump’s tariffs. Target and Best Buy raised alarms about that likelihood this week, days before the White House offered temporary reprieves for some of the duties it announced. Walmart, too, has warned it won’t be entirely “immune” from the new import taxes on America’s top trade partners.
The BLS report showed Friday that retailers shed 6,000 jobs, but the sector's average employment levels have held steady over the past year.
