The first jobs report representing a full month under the new presidential administration was a disappointment, though February’s employment situation didn’t miss estimates as widely as the prior day’s ADP report might have suggested.
The Labor Department reported Friday that nonfarm payrolls grew by 150,000 in February—up from last month’s figures but shy of the still-modest 160,000 jobs that economists expected. It was enough, however, to qualify as America’s 50th consecutive month of payroll gains. Meanwhile, January’s jobs tally was revised downward by 18,000, to 125,000, while December’s jobs total was revised northward by 16,000, to 323,000.
Unemployment also was worse than anticipated, ticking up to 4.1%—above the 4.0% unemployment rate that economists were looking for, and up slightly from January (also 4.0%). Wage growth of 0.3% month-over-month, to $35.93 hourly, was in line with the consensus expectation.
“February’s jobs report came in under expectations, unsurprisingly, as we’ve seen jobless claims spike this month,” says Steve Rick, Chief Economist at TruStage. “This month saw the largest increase in jobless claims in over four months, indicating the labor market is beginning to be impacted by the layoffs of federal employees. It is unlikely we have seen the last of these cuts and looking forward, we expect to see the layoffs trickle down to local economies. We are also monitoring for spillover into the private sector in the coming months.”
While short of the mark, some economists might have been looking for worse following Thursday’s weak ADP report, which saw the U.S. add just 77,000 jobs—leagues below estimates of 148,000 and the lowest such gain since July 2024.
“Today’s print wasn’t as bad as feared,” says Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management. “The payrolls growth surprised slightly to the downside and the unemployment rate ticked up, justifying the momentum that’s been building for a resumption in the Fed’s cutting cycle.”
Here’s a brief look at the February jobs report’s most pertinent details:
- February payrolls: +151,000 month-over-month (estimate: +160,000)
- February unemployment: 4.1% (estimate: 4.0%)
- February hourly earnings: +0.3% MoM (estimate: +0.3%)
- January payrolls (revised): +125,000 (+143,000 previously)
- December payrolls (revised): +323,000 (+307,000 previously)
Health care continued its robust string of hiring, adding 52,000 jobs in the month, which was right around its average monthly gain of 54,000 over the past year. Employment in financial activities (+21,000), transportation and warehousing (+18,000), and social assistance (+11,000) were notably higher.
Federal government employment was expectedly down, though the decline of just 10,000 indicates that much of the tumult out of Washington hasn’t yet filtered down into the data.
“While the jobs report showed a contraction of 10,000 federal government employees, a number of layoff announcements last month came after the survey period for the jobs report closed,” says Josh Jamner, Senior Investment Analyst at ClearBridge Investments.
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Past that, the only major decline in employment came from leisure and hospitality, which saw 16,000 jobs disappear.
“February’s weak jobs report presents a challenge for the Federal Reserve as it navigates the timing of future interest rate cuts,” says Joe Gaffoglio, CEO and President at Mutual Of America Capital Management. “The labor market is showing signs of weakness with hiring across sectors, but inflation still remains sticky above the Fed’s 2% target. Deteriorating indicators like hiring intentions, new job listings and temporary staffing suggest a potential slowdown in employment growth.
“Even with these conditions, we don’t expect the Fed to cut rates at its next meeting or even in the next few months, but if the job market continues to weaken they will need to take action.”
Indeed, the CME FedWatch Tool, which uses Fed funds futures prices to track the probability of a change to the central bank’s benchmark rate, shows a 95% chance that the central bank will keep its current rate policy in place during the next Federal Open Market Committee (FOMC) meeting, set for March 18-19. That’s a step up from the 92% chance that FedWatch indicated both a week and a month ago.
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“Investors are likely to temper their reactions to this morning’s data due to the perception of it being ‘already stale’ given the rapid policy shifts coming from D.C.,” Jamner says. “Fundamentals have not been the primary driver of equity markets in recent weeks, and today’s “steady as she goes” report isn’t strong (or weak) enough to overwhelm policy uncertainty and change that dynamic.”
More Expert Reactions to February’s Jobs Report
Here’s what other strategists, financial managers, and experts had to say about the February employment situation:
Lara Castleton, U.S. Head of Portfolio Construction and Strategy, Janus Henderson
“This was a critical print after confidence on the economy has taken a turn and market participants were looking to either confirm or reverse that sentiment. While a slight miss, February’s print will likely ease overly sour expectations on the economy. Average hourly wage growth was as expected at 0.3% and manufacturing jobs ticked up. All-in, there’s no clear sign to take from this print, and the path ahead will be muddy. [Department of Government Efficiency (DOGE), a government initiative] cuts will not start to materialize until March’s print, and the impact of immigration will continue to be in focus.
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“Without much signal from the noise, investors should gain comfort from the idea that diversified portfolios seem to be working again. Health care, real estate and international stocks have come back to life while bonds have started to perform as a ballast once again.”
Jack McIntyre, Portfolio Manager, Brandywine Global
“The best way to describe the February U.S. employment report was that it was one of those rare Goldilocks-type of economic reports. There’s something for everyone. For now, it alleviates the growth scare and inflation concern narratives, which is good for both bonds and stocks.
“There is a fair chance that the February report is one of the strongest of the year as fiscal constraint, immigration contraction, and elevated levels of uncertainty keep the private sector from hiring aggressively over the course of 2025. The report supports our investment theme that 2025 will indeed be the year of a weak dollar, and non-USD assets will continue to outperform.”
Jason Pride, Chief of Investment Strategy & Research, Glenmede
“Efforts to streamline federal government operations are starting to show up in the data, with employment there declining by 10k. This may just be the tip of the iceberg for government payrolls, as the effects of program cuts and voluntary buyout packages only just began to be felt in February. The private sector has been able to effectively absorb those extra employees in the past, which is also a possibility now given repeated statements from businesses regarding a dearth of qualified labor.”
Scott Helfstein, Head of Investment Strategy, Global X
“The private sector continues adding jobs though we are a bit concerned about softening business optimism. Delineating signals from noise is particularly challenging at the moment, so focusing on areas of long-term secular growth or hedged strategies could make sense.
“When it comes to the U.S. economy, labor conditions and household leverage are critical. We learned that the private sector job market remains reasonably healthy and average earnings are up modestly. So, labor and leverage remain constructive. While volatility will likely remain a challenge for now, it might not be time to bet against the U.S. The U.S. consumer is still OK even if sentiment is softening and savings is higher.”
