U.S. employers added 151,000 jobs in February, an increase from January’s downward revision of 125,000 but below the 170,000 forecast. The unemployment rate edged up to 4.1%, its highest level since late 2023, while hourly wages rose 4.0% year-over-year. The labor force participation rate declined to 62.4%, its lowest level in over a year. Job gains were concentrated in healthcare, financial activities and transportation and warehousing, while retail, leisure and hospitality and government saw declines. February marks the 50th consecutive month of job growth, though at a more moderate pace.
The Numbers
151,000: U.S. employers added 151,000 jobs in February.
4.1%: The unemployment rate rose slightly to 4.1%.
4.0%: Wages rose 4.0 % over the past year.
The Good
The U.S. economy maintained a steady pace of job growth in February, with employers adding 151,000 jobs—an improvement over January’s revised figure of 125,000 and marking the 50th consecutive month of job growth. While the increase fell short of economists’ expectations of 170,000, it still signals steady hiring. Healthcare remained a key driver of job growth, adding 52,000 positions, in line with its 12-month average. Other sectors contributing to job gains included financial activities (+21,000), transportation and warehousing (+18,000) and social assistance (+11,000). Wage growth remained solid, with average hourly earnings rising 4.0% year-over-year.
The Bad
While job growth remained, signs of softening emerged in February’s report. The unemployment rate ticked up to 4.1%, its highest level since late 2023, and the labor force participation rate declined to 62.4%, its lowest level in over a year. The labor force shrank by 385,000 workers, and the household survey painted an even weaker picture, showing a drop of 588,000 employed individuals. Additionally, the number of workers holding part-time positions but seeking full-time work surged by 460,000 to 4.9 million. Retail saw a loss of 6,000 jobs, while the leisure and hospitality sector declined by 16,000, with a notable loss (-27,500) in bars and restaurants.
The Unknown
February’s report raises questions about the trajectory of the labor market in the months ahead. While job creation remains positive, the dramatic decline in household employment and rising underemployment suggest potential weakness beneath the surface. The Federal Reserve is closely monitoring these developments as it considers the timing of interest rate cuts. Uncertainty remains high as market volatility has increased in recent weeks, and consumer sentiment surveys have shown concerning drops in confidence.
Conclusion
The February 2025 jobs report presents a mixed picture of the U.S. labor market. While job gains persisted, the increase in unemployment and decline in labor force participation raise concerns about underlying labor market strength. For now, the labor market remains fundamentally healthy by historical standards, with unemployment still near record lows. The coming months will be crucial in determining whether the labor market maintains its resilience or enters a more pronounced slowdown.
