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In February, U.S. employers increased their workforce by 151,000 jobs, a figure that fell short of economists’ expectations and highlights a potential deceleration in the labor market, coinciding with signs of economic growth slowing down.
The Numbers
According to a survey conducted by FactSet, analysts had predicted that the economy would add approximately 160,000 jobs last month.
The unemployment rate also ticked up to 4.1%, slightly surpassing the 4% forecast from the same survey.
While hiring figures have dipped since a surge in December, which recorded 323,000 new jobs, experts maintain that the labor market has demonstrated robustness during the early months of 2025.
What It Means
Experts are interpreting the February job report as an indication of “weakness in the labor market, with hiring across various sectors slowing,” according to Joe Gaffoglio, CEO of Mutual of America Capital Management. In a recent communication, he emphasized that declining metrics such as hiring intentions, new job postings, and the demand for temporary staff could suggest a slowdown in employment growth.
Additionally, Andy Stettner, a specialist in unemployment insurance at The Century Foundation, remarked that substantial job cuts in the government sector have not yet been captured in this report. This lag is due to the time it takes for unemployment claims from federal employees to be processed and reflected in official statistics. Notably, federal employment saw a reduction of 10,000 jobs last month, as reported by the Bureau of Labor Statistics. The public sector in the U.S. employs over 2 million individuals.
Furthermore, layoffs surged across the nation in February, reaching levels not seen since 2020. A significant number of these job losses stemmed from reductions in federal workforce mandated by Elon Musk’s Department of Government Efficiency (DOGE), according to the outplacement firm Challenger, Gray & Christmas. In total, over 172,000 jobs were eliminated, a staggering 245% increase compared to January and double the layoffs reported a year earlier. This marks the highest monthly layoff rate since July 2020, when nearly 263,000 job cuts were recorded.
What the Experts Say
The slightly lower-than-anticipated jobs report for February may influence the Federal Reserve’s decision to consider lowering its benchmark interest rate, according to Lindsay Rosner, head of multi-sector fixed-income investing at Goldman Sachs Asset Management. Until now, the Fed had paused its rate cuts in January, citing ongoing inflationary concerns. However, Fed Chair Jerome Powell has indicated that close monitoring of the labor market is taking place for any signs of weakness, which could trigger future rate cuts.
Currently, only about 10% of economists surveyed by FactSet anticipate that the Fed will implement a rate cut at its upcoming meeting on March 19. Nearly half of those polled foresee a potential rate decrease during the ensuing meeting scheduled for May 7.
“The unexpected dip in payroll growth and the slight rise in the unemployment rate reinforce the momentum towards a possible return to the Fed’s cycle of rate cuts,” remarked Rosner.
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