The economy added 151,000 jobs in February, and the unemployment rate ticked up slightly to 4.1%, the Bureau of Labor Statistics reported Friday.
Investors had expected roughly 159,000 new jobs and for the unemployment rate to hold steady at 4%.
The interpretation
“Everyone can take a breath. However, this may be the last good report for some time in the sense that things remain relatively stable, but it’s not rolling in the implications of government layoffs,” Brian Marks, executive director of the University of New Haven’s Entrepreneurship and Innovation Program, told the Washington Examiner.
What it means … for Trump
February’s jobs growth is welcome news for President Donald Trump, who is now the face of the economy. It shows the economy is in good shape to start his second term. Trump is hoping to continue and improve on the job growth notched under former President Joe Biden but is carrying out a slate of major policy changes that could raise uncertainty and risk the economic expansion.
In the coming year, Democrats will expectedly seize on any weakness in the labor market and attempt to blame it on Trump and his “Make America Great Again” agenda.
What it means for … the Fed
The decent growth in jobs will likely persuade Federal Reserve officials that no major change in monetary policy is needed.
There was little reaction in the bond markets to Friday’s report. Investors maintained their expectation that the central bank would likely cut its interest rate target in June.
After a long period of very high interest rates designed to quash inflation, the Fed began cutting short-term rates in September.
The underlying reality
February’s report suggests the labor market has momentum.
Trump took office with a resilient, although slowing, labor market. He has since moved quickly to implement major changes in economic policy, most notably by beginning to impose historically large tariffs on trade partners, laying off government workers through the Department of Government Efficiency, curbing unauthorized border crossings, and cutting regulations. Although some of those moves have raised fears of a slowdown, those concerns are not yet showing up in the data, other than a reduction in federal workers.
It is helpful to look at the overall trend for the labor market. The three-month moving average of job gains fell in February to 200,000, but that is still well above the rate needed to keep up with population growth.
Roughly 113,000 new payroll jobs are needed each month to keep unemployment from rising, according to the Federal Reserve Bank of Atlanta. Note, though, that a separate estimate that takes into account the full extent of recent immigration puts the number as high as 200,000.
Prime-age employment, relative to the overall population, is strong by historical standards.
Recession watch
The unemployment rate, taken from the jobs report’s household survey, is still low by historical standards. It rose by a tenth of a percentage point to 4.1% in February after gradually creeping up over the past year.
Recessions entail a rising unemployment rate.
Friday’s data suggest that the U.S. labor market is moving away from triggering one major recession indicator — namely, when the three-month moving average of the unemployment rate rises half a percentage point relative to its minimum point over the past year. This indicator, known as the Sahm Rule, signaled the start of all postwar recessions.
The indicator had been triggered in mid-2024 but is no longer signaling a recession.
Industries to watch
Federal government employment fell by 10,000 in February, the largest decline since June 2022. The number of federal employees is a key statistic to watch as Trump and DOGE leader Elon Musk have aimed to reduce the federal workforce significantly.
The leisure and hospitality sector in the past year has finally exceeded the employment levels it reached in February 2020, right before restaurants and bars were forced to shut down across the country.
Construction employment has remained robust, even as the housing market has taken a massive hit over the past few years as mortgage rates have soared alongside the Fed’s rate hikes. That’s in part because of a huge backlog of multifamily housing construction over the past year. Economists will watch closely for any sign of slowing hiring in construction.
Unemployment rates by race and ethnicity
The household survey also includes unemployment rates by race and ethnicity. Rates for all groups neared record lows in the past few years. In February, unemployment rates dropped for black and Asian workers but edged up for white and Hispanic workers.
