TLDR
- US labor market added 151,000 jobs in February, below expectations of 160,000
- Unemployment rate rose to 4.1%, up from 4% in January
- Wage growth slowed to 4% year-over-year, down from 4.1% in January
- Labor force participation rate fell to 62.4% from 62.6%
- February’s job gains were stronger than January’s revised 125,000 increase
The US labor market added 151,000 jobs in February, falling short of economists’ expectations of 160,000 new positions, according to data released Friday by the Bureau of Labor Statistics. The unemployment rate ticked up to 4.1% from 4% in January.
Despite missing forecasts, February’s employment gains showed improvement over January’s revised figure of 125,000 jobs, which was initially reported as 143,000. The latest report provides a mixed picture of the labor market as the Federal Reserve prepares for its upcoming interest-rate decision.
Wage growth, a key indicator for inflation pressures, rose 4% over the past year, down from 4.1% in January. On a monthly basis, wages increased 0.3%, below the previous month’s 0.4% gain.
The labor force participation rate declined to 62.4% in February from 62.6% in January. This drop suggests fewer Americans are either working or actively looking for work.
About 7.1 million workers were unemployed in February. The unemployment rate has remained within a narrow range of 4% to 4.2% since May 2024, indicating the labor market is still relatively stable.
The February jobs report comes during a week of volatile market action. Investors have been processing weaker-than-expected economic data alongside tariff announcements from President Trump that have clouded the economic outlook.
Financial markets showed mixed reactions to the employment data. Stocks ticked higher immediately following the report’s release, despite the slight miss in job creation.
Stock market showing signs of weakness
The tech-heavy Nasdaq Composite entered correction territory on Thursday. The index is now more than 10% below its mid-December record close.
The S&P 500 also closed at its lowest level of the year on Thursday. Market volatility has increased as investors reassess growth expectations in light of recent economic indicators.
The February employment report is the final major labor market data before the Federal Reserve’s next meeting on March 18-19. Analysts suggest a March interest-rate cut is unlikely, though cuts may occur later in 2025.
The labor market has maintained what economists consider “full employment” despite the slight uptick in the unemployment rate. The range-bound unemployment figures suggest overall stability in the job market.
Economic uncertainty appears to be influencing hiring decisions. Analysts suggest that concerns around federal policy and the broader economy may have kept some employers cautious about adding new positions in February.
The modest job gains come amid broader questions about the economy’s direction. Recent weeks have seen a string of economic data points that have generally underperformed expectations.
The job market has been a bright spot in the US economy throughout much of the post-pandemic period. However, recent months show signs of gradual cooling rather than rapid growth.
January’s job creation was revised downward to 125,000 from the initially reported 143,000. These revisions suggest the labor market may have been slightly weaker than first estimated at the start of 2025.
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