Job growth was weaker than expected in February as the Trump administration began to slash the federal workforce.
Nonfarm payrolls increased by a seasonally adjusted 151,000 on the month, better than the downwardly revised 125,000 in January but less than the 170,000 consensus forecast from Dow Jones, the Labor Department’s Bureau of Labor Statistics reported Friday. The unemployment rate edged higher to 4.1%.
The report comes amid efforts from Elon Musk’s Department of Government Efficiency to pare down the federal government, starting with buyout incentives and including mass firings that have impacted multiple departments.
Though the reductions likely won’t be felt fully until coming months, the efforts are beginning to show. Federal government employment declined by 10,000 in February though government payrolls overall increased by 11,000, the BLS said.
Many of the DOGE-related layoffs happened after the BLS survey reporting period, meaning they won’t be included until the March report. Outplacement firm Challenger, Gray & Christmas reported earlier this week that announced layoffs under Musk’s efforts totaled more than 62,000.
Health care led the way in job creation, adding 52,000 jobs, about in line with its 12-month average. Other sectors posting gains included financial activities (21,000), transportation and warehousing (18,000) and social assistance (11,000).
On wages, average hourly earnings increased 0.3%, as expected, though the annual increase of 4% was a bit softer than the 4.2% forecast.
Stock market futures moved higher following the report while Treasury yields were lower.
The BLS report tracks a tumultuous month for markets and the economy.
Stocks have gyrated on a daily basis since President Donald Trump has taken office, with movements depending largely on tariff news that has changed rapidly. At the same time, Musk’s efforts through DOGE have been reflected in surveys showing high levels of worker angst.
The February numbers, though, show that the labor market is stable. The December jobs count was revised up to 323,000, an increase of 16,000, while the new January figure represents a decline of 18,000 from the previous estimate.
Though the report indicated continued job growth, some of the details were a little less positive.
The labor force participation rate slumped to 62.4%, its lowest level since January 2023, as the labor force declined by 385,000. A broader measure of unemployment that includes discouraged workers and those holding part-time positions for economic reasons jumped half a percentage point to 8%, its highest level since October 2021.
Also, the household survey told a different story, showing a plunge of 588,000 workers.
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