By Justin Lahart

The U.S. continued to generate jobs at a steady pace in February, offering reassurances that the labor market has remained relatively stable since President Trump took office.

The U.S. added a seasonally adjusted 151,000 jobs in February, the Labor Department reported Friday, slightly below the gain of 170,000 jobs economists polled by The Wall Street Journal expected to see.

That was better than the 125,000 jobs added in January.

The unemployment rate, which is based on a separate survey from the jobs figures, rose to 4.1% from 4%.

Economists believe that the cuts to federal government jobs that have come since President Trump came into office came too late to be captured in the February figures. But the report did show a loss of 10,000 federal government jobs, while government jobs at the state and local level increased by 21,000.

Healthcare accounted for a large portion of the February employment gain, adding 52,000 jobs. The transportation and warehousing industries added 18,000 jobs. On the other side of the ledger, retailers shed 6,000 jobs, and the leisure and hospitality industries lost 16,000 jobs.

Average hourly earnings rose 0.3% from January, putting them 4% above their year-earlier level.

Economists expect that the combination of government job layoffs, reduced government funding, uncertainty over tariffs and immigration restrictions will at least temporarily weigh on employment growth in the months ahead.

Stock futures rose after the report was released.

For its jobs figure, the Labor Department surveys employers on how many people they had on their payrolls during the pay period that includes the 12th of the month; anybody who worked at all during that period in February was counted as employed. That includes federal workers still in their probationary period after getting hired or promoted that the White House began laying off around Feb. 13. It also includes the roughly 75,000 people who accepted the White House's "deferred resignation" offer, where the White House said they don't have to work but can still get paid through the end of September.

Those layoffs will begin showing up in the jobs count in the months ahead. Exactly how many federal government workers have lost their jobs so far as a result of the "Workforce Optimization Initiative" led by Elon Musk's Department of Government Efficiency is unclear. Some firings might not have been announced, while in other cases fired workers have been called back to the office. There are also layoffs at private-sector employers where government contracts and grants have been canceled.

Outplacement firm Challenger, Gray & Christmas on Thursday said that it counted 63,583 layoff announcements in February in the federal workforce and in government contractors. Labor Department data also show that there has been a pickup in initial claims for unemployment benefits filed by federal government employees.

Beyond any layoffs, the government could also lose a substantial number of jobs due to attrition. President Trump put a hiring freeze in place on Jan. 20, the day he was inaugurated.

Strategists at Evercore ISI worry that uncertainty over contracts and grants is having "an additional paralyzing effect on hiring at employers exposed to these funding sources or in need of regulatory approvals from agencies that are themselves paralyzed by DOGE review."

Many businesses are enthusiastic about Trump's plans to cut taxes and scale back regulations, and that could lead them to increase hiring. The White House believes that tariffs will encourage automakers and other manufacturers to bring more production, and jobs, to the U.S., and that cuts to government jobs and spending will ultimately make the economy more efficient.

Belt-tightening by government workers who have lost their jobs, or fear losing them, has begun to show up. Card spending by Bank of America customers in the Washington, D.C., metropolitan area has slowed, according to an analysis conducted by the bank's economists.

Worries over tariffs could also weigh on the labor market. This is in part because uncertainty over what imports from what countries will ultimately be subject to higher tariffs, and at what rates, makes it hard for businesses to hire. In the Federal Reserve's compilation of economic anecdotes, known as the beige book, released Wednesday, the Dallas Fed noted that "tariffs and the impacts of shifting trade policies on prices were a source of significant concern for businesses across many industries."

Immigration policy could also restrain the job market. The number of people coming into the U.S. began declining last summer, but since Inauguration Day appears to have dropped sharply. The Department of Homeland Security said in a Feb. 20 release that "daily border encounters" had plunged 93% since Trump took office. Additionally, worries about deportations could lead some people to withdraw from the labor force. Ahead of Friday's release, JPMorgan Chase economists assumed that slowing immigration would cut into February's employment count by 25,000 jobs.

Write to Justin Lahart at Justin.Lahart@wsj.com

(END) Dow Jones Newswires

March 07, 2025 08:53 ET (13:53 GMT)

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