U.S. employers added 151,000 jobs in February.
It could be the calm before a storm, or it may be business as usual.
U.S. employers added 151,000 jobs in February, the first full month under the new Trump administration, extending a streak of job growth to 50 months. The unemployment rate rose to 4.1 percent, from 4 percent.
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Is DOGE playing a role? The survey showed a decline of 10,000 in federal employment. But the report was based on surveys conducted in the second week of February, and economists say the administration’s mass firings, buyouts and hiring freezes at federal agencies may not fully surface in the monthly data until sometime this spring.
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What about tariffs? A similar wait is in store for those hoping to ascertain the effects that President Trump’s tariffs — both those imposed and those still threatened — may have on global trading partners, business investment and employment.
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Zooming out: Even without the shake-up in foreign trade and federal employment, private-sector hiring has slowed substantially from the blowout pace of 2021 to 2023. That has left labor market analysts and financial commentators gearing up for a potential cooling in economic growth this year.
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Context: For now, unemployment continues to glide just above record lows. And gains in average hourly earnings for workers have kept up a solid pace, overtaking inflation since mid-2023.
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What they’re saying: The stock market reacted to the report positively, as did most economists. “This is a fundamentally healthy labor market, continuing its earlier momentum, albeit at a slightly slower pace,” said Justin Wolfers, an economist at the University of Michigan.
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“A detox period”: In an interview Friday morning with CNBC before the release of the data, Treasury Secretary Scott Bessent asserted that financial markets and the economy overall had become too reliant on government spending and there is “going to be a detox period” going forward, prompted by Trump administration cutbacks. Other Trump advisers, including Elon Musk, have also issued such warnings. “Could we be seeing that this economy that we inherited starting to roll a bit? Sure,” Mr. Bessent said.
After fluctuating this morning, stocks have turned downward, with the S&P 500 falling about 0.7 percent and the tech-heavy Nasdaq Composite off roughly 0.8 percent. Even though the jobs numbers for February didn’t prompt a knee-jerk response from Wall Street, the Trump administration’s on-again, off-again approach to tariffs has put investors on edge, raising concerns about the effects on the economy in the months ahead.
All eyes are now on Fed chair Jerome Powell, who is scheduled to speak about the economic outlook at 12:30 p.m. Today is the final day before a scheduled blackout, in which communications about monetary policy are limited ahead of the Fed’s next meeting. Officials are due to gather on March 18-19 and are widely expected to hold interest rates in a range of 4.25 percent to 4.5 percent.
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The Fed has two goals: maintain low, stable inflation while also keeping the labor market healthy. Speaking on Friday, Michelle Bowman, a Fed governor, said that the labor market and economic activity “will become a larger factor” in the central bank’s policy discussions as inflation continues to make progress towards the Fed’s 2 percent target.
Jobs reports are always backward-looking, in that they reflect data collected weeks earlier. But this one really feels like a look back at an earlier era, before all the disruptions of the past few weeks.
Major U.S. stock indexes fell at the start of trading, with the S&P 500 opening roughly 0.2 percent lower. The moves are muted compared with the swings earlier this week, as investors grappled with shifting tariff policies from the Trump administration. “If nothing else, markets will be happy for this (likely short) respite in volatility,” noted Seema Shah, chief global strategist at Principal Asset Management.
As a taste of what we may see in the coming months, the outplacement firm Challenger, Gray and Christmas clocked 172,017 layoffs last month, concentrated among federal agencies. That’s the highest number it had seen since July 2020, in the middle of the pandemic.
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The leisure and hospitality sector dropped 16,000 jobs in February. The big decrease was at bars and restaurants, which shed 27,500 positions.
Food services and drinking establishments only regained their prepandemic employment level last September, and remain just slightly above it.
The tick up in the unemployment rate underscores the difficult hiring landscape facing recently laid off federal workers, though their opportunities vary widely by profession and location, as Colby and I wrote this morning.
The public sector overall experienced net job growth. A loss of 10,000 jobs for the federal government paired with a 21,000 gain for state and local governments. Experts say that we should expect the slew of federal firings to show up in the data over the next couple of months.
Education and health
+73,000 jobs
Construction
+19,000
Government
+11,000
Manufacturing
+10,000
Business services
–2,000
Retail
–6,300
Leisure and hospitality
–16,000
The slowing pace of employment growth squares with the job openings data for January, which dropped sharply. The job openings rate has been moving sideways recently after dropping precipitously, but the contraction of federal government hiring may push it lower.
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This report is welcome news for the Fed in that it does not show a rapid deterioration of the labor market, but rather a continued cooling. What would spook officials is if jobs growth were to slow sharply or even turn negative, or the unemployment rate were to spike significantly. Right now, the Fed retains the flexibility to approach interest rate cuts cautiously, meaning it is likely to remain on hold.
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4.1%
The average work week remained at 34.1 hours, matching the low from March of 2020. That’s an indication that labor demand is weaker than the headline payroll jobs number suggests.
Average hourly earnings for private-sector workers rose 0.3 percent over the month, or 4 percent since last year. That’s still strong wage growth, though a slower monthly pace than in January.
The unemployment rate only edged up by a tenth of a point, but other data from the household survey was much weaker. The labor force shrank by 385,000, and employment fell by 588,000.
As regular jobs-day watchers know, the data in the report comes from two separate surveys, one of businesses and one of households. The two use different definitions and sometimes tell conflicting stories, as they do this month.
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Federal government jobs fell by 10,000, an unusual drop that may have reflected cuts by the Department of Government Efficiency, or at least the hiring freeze that took effect in January.
February’s total for federal government employment, which includes the United States Postal Service, was 3,007,000. Although down from January, that was 22,000 above the number from a year earlier.
The stock market is reacting positively to the numbers, with futures on the S&P 500 up around half a percent since the data came out.
The numbers are out! Employers added 151,000 jobs in February and the unemployment rate ticked up to 4.1 percent.
There were small, offsetting revisions to the prior months’ figures. December’s gain was revised up by 16,000 jobs, and January was revised down by 18,000.
Stocks remain muted ahead of the report being released — a brief moment of calm in during a volatile week. Futures on the S&P 500, which give investors the ability to trade before exchanges officially open for trading, traded basically flat early Friday morning.
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The Fed is watching closely for any signs of weakness in the economic data, especially after recent measures tracking consumer sentiment showed a worrisome drop in confidence. The central bank has justified putting interest rate cuts on hold because the economy has not shown signs of cracking. If that were to change, officials would be in a more difficult position given that high inflation has yet to be vanquished.
Yesterday, a report showed that continuing jobless claims — a measure of the number of people out of work for longer periods — edged near a three-year high in January. It suggested that while layoffs remain muted, job seekers are having a harder time.
From that same report, initial jobless claims overall were muted. But they have spiked in recent weeks in Washington, D.C. and among federal workers, albeit from a low base.
The jobs report comes amid concerns about statistical agencies’ independence.
Comments from a member of President Trump’s cabinet have renewed concerns that the new administration could seek to interfere with federal statistics, possibly including the monthly jobs report.
In an interview on Fox News on Sunday, Commerce Secretary Howard Lutnick suggested that he planned to change the way the government reported data on gross domestic product to remove the impact of government spending.
Mr. Lutnick oversees two major statistical agencies — the Bureau of Economic Analysis, which produces G.D.P. data, and the Census Bureau — but not the Bureau of Labor Statistics, which publishes the jobs report. There is no evidence that he or anyone else in the Trump administration has sought to change or influence any economic statistics published by the statistical agencies.
Still, experts in recent years have warned that statistical agencies’ independence rests more on norms than on statutory protections, and that the agencies could therefore be vulnerable to political interference. They have also expressed concern about the impact that layoffs and budget cuts could have on the statistical agencies, which were already struggling to collect data as survey response rates fell.
“It’s very concerning,” said Nancy Potok, who was chief statistician for the United States during the Obama administration and Mr. Trump’s first term. “It puts the U.S. in the company of countries that are notorious for fudging the numbers to support failed economic policies.”
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The markets are uneasy after a week of dizzying policy shifts.
The stock market suffered its worst week in many months, after a series of dizzying policy shifts on tariffs from the White House amid simmering concerns about the health of the economy.
The S&P 500 seesawed throughout the day on Friday, marking a volatile end to a turbulent week, as investors parsed the latest employment data and comments from the Federal Reserve chair, Jerome H. Powell, about the direction of interest rates.
Even though the index ended the day with a gain, the S&P 500 notched its third consecutive week of losses with a drop of 3.1 percent, its sharpest weekly decline since early September.
There has been a sharp mood shift since the index hit a record high less than a month ago, as investors have become worried about the trajectory for economic growth, made worse by tariffs on imports from the country’s largest trading partners. Surveys have also showed mounting concern among consumers.
On Friday, investors appeared to take solace from Mr. Powell’s comments after he struck a positive tone, saying “despite elevated levels of uncertainty, the U.S. economy continues to be in a good place.” He reiterated the Fed’s commitment to keep rates steady as it works to bring down inflation. Another positive sign on Friday came from the labor market. With 151,000 jobs added in February, the data showed a pace of hiring moderate enough to temper fears about resurgent inflation, yet robust enough to avoid exacerbating worries about a slowing economy.
Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors, said the jobs data would probably ease “overly sour expectations” about the economy. “After confidence on the economy has taken a turn,” she said, “market participants were looking to either confirm or reverse that sentiment.”
It had already been a bruising week for investors after 25 percent tariffs came into force on Mexico and Canada on Tuesday, and an additional 10 percent tariff on China. Concessions were made on Thursday, suspending the tariffs on many goods from Canada and Mexico, but it failed to stoke a rally.
There were other signs of strain. The U.S. dollar suffered its worst week in more than two years, sliding more than 3 percent against a basket of currencies of the United States’ major trading partners. Both the Mexican peso and Canadian dollar strengthened against the U.S. dollar, after two weeks of losses.
And other areas of the markets that had initially benefited after Mr. Trump’s election have also come under pressure. Tesla, the electric car company run by Elon Musk, has halved its value since December. Bitcoin is down roughly 20 percent over the same period.
“I think the markets are essentially taking President Trump a bit more seriously on tariffs,” said Jim Caron, chief investment officer of the portfolio solutions group at the Morgan Stanley Investment Institute. He said that despite the recent sell-off, major stock indexes remained close to record highs and the economy remained in good shape.
Much of the sell-off has been driven by big technology companies, which, because of their size, have a big effect on broad indexes. Since the S&P 500 peaked on Feb. 19, the index has fallen just over 6 percent. A separate measure that gives all of the stocks an equal weight in the index had fallen 4.4 percent over the same period.
What isn’t clear is whether investors are selling because they see the tide turning for tech companies or because of broader concerns. Tech giants, buoyed by opportunities in artificial intelligence, had enjoyed a sharp rise until this year when it appeared more competition may be entering the A.I. market.
The threat of competition created some selling pressure, but investors may also be pulling back because they are worried about the broader trajectory of the market.
All 11 sectors of the S&P 500 except health care stocks ended the week in the red, with financials and consumer discretionary stocks joining tech among the worst performing.
The Russell 2000 index of smaller companies more exposed to the ebb and flow of the economy has fallen even further than the S&P 500. The index fell 3.8 percent this week and is now almost 15 percent below its recent peak reached in November.
“In the last couple of weeks, and maybe for the next couple of weeks, we have gone through a very challenging news cycle,” Mr. Caron said. “We need to get through that and assess how much damage there is to markets.”
