Jamie Spencer
The February jobs report released on Friday showed slightly higher job gains and a rise in the unemployment rate to 4.1%, adding to investor concerns about the U.S. labor market and broader economy.
Job Growth and Unemployment Rate
Data from the Bureau of Labor Statistics indicated that 151,000 new jobs were created in February, falling short of economists’ expectations of 160,000 but exceeding January’s revised total of 125,000. The unemployment rate ticked up from 4.0% to 4.1%.
With the Department of Government Efficiency’s (DOGE) job cuts in focus, federal government employment declined by 10,000 in February.
Economists’ Reactions
RSM Chief Economist Joe Brusuelas called the report a “Goldilocks” print, suggesting it was neither too hot nor too cold.
“We know that over the next three to six months, we’re going to see some of the disruptive effects in Washington start to show up in both the economy and in the labor market,” Brusuelas told Yahoo Finance. “But for now, what this tells us is that we really only need to add about 100,000 to 150,000 jobs a month to keep employment stable. That’s exactly what happened.”
Wage Growth and Labor Force Participation
Wage growth, a key indicator for inflation, rose 4% year over year in February, slightly lower than the 4.1% increase recorded in January. On a monthly basis, wages increased by 0.3%, compared to 0.4% the previous month.
The labor force participation rate also dipped slightly to 62.4%, down from 62.6% in January.
“The upshot is that the labor market remains in decent shape and should be able to weather the DOGE-related cull of federal government employees,” said Capital Economics North America economist Thomas Ryan. “However, we will have to wait until next month to assess the damage.”
Market Reactions and Federal Reserve Outlook
The jobs report followed a volatile week on Wall Street, where investors grappled with weaker-than-expected economic data and ongoing tariff concerns stemming from President Donald Trump‘s trade policies.
On Thursday, the Nasdaq Composite officially entered a correction, now more than 10% below its mid-December record high, while the S&P 500 closed at its lowest level of the year.
Market expectations for Federal Reserve interest rate cuts remained mostly unchanged after the report. Investors are still pricing in three rate cuts for this year, according to Bloomberg Data, up from the one or two cuts anticipated last month.
