U.S. job growth remained stable last month, but the unemployment rate ticked up, offering a mixed picture of a labor market navigating rapid shifts in government policy.
According to the Bureau of Labor Statistics report released Friday, nonfarm payrolls rose by 151,000 in February following a downward revision to the previous month’s figures. Meanwhile, the unemployment rate climbed to 4.1%.
The report signals a weakening job market, with more individuals permanently out of work, fewer employees on federal payrolls, and an increase in those working part-time due to economic conditions. Additionally, the number of Americans holding multiple jobs surged to a record 8.9 million.
This economic backdrop coincides with growing concerns over President Donald Trump’s policies, which could impact broader economic stability. Inflation has remained stubbornly high, and consumer spending is beginning to slow—factors that may prompt businesses to reconsider hiring.
“The near-term outlook for policy is uncertain, making the economy’s trajectory uncertain as well,” said Bill Adams, chief economist at Comerica Bank. He noted that if the administration proceeds with significant tariff hikes and spending reductions, these measures could further dampen job growth and push unemployment higher in the coming months.
Federal Reserve officials have emphasized the need for clearer signs of easing inflation—potentially reflected in next week’s consumer price index—before considering interest rate cuts. Given the uncertainty surrounding Trump’s policies, the Fed is widely expected to maintain current rates at its upcoming meeting.
Financial markets reacted with gains in the S&P 500, a decline in the dollar, and lower Treasury yields.
Job gains were primarily driven by the health care, transportation, and financial sectors. However, government payroll growth, which has been a major contributor to job creation in recent years, slowed significantly, with federal employment seeing its steepest decline since June 2022.
February’s payrolls data was collected before most of Trump’s government layoffs took effect, suggesting that March figures may reflect a sharper downturn, according to Stephanie Roth, chief economist at Wolfe Research LLC.
This marks the first jobs report under Trump’s second term, and the administration’s push to reduce government employment has already led to the largest wave of job-cut announcements since the early days of the pandemic, per separate data released Thursday. Some economists predict that federal job cuts could result in a loss of over half a million jobs by year’s end, with broader economic consequences.
At the same time, Trump is using tariffs to encourage domestic manufacturing, prompting companies like Apple Inc. and HP Inc. to explore increased U.S. investments. However, not all industries are benefiting—Alcoa Corp. has warned that these tariffs could cost 100,000 jobs.
Furthermore, potential immigration restrictions could curb a key driver of recent job growth.
“We are reducing government employment and spending while boosting manufacturing jobs,” said Kevin Hassett, Trump’s director of the National Economic Council, in an interview with media on Friday.
