WASHINGTON — Last month, U.S. employers bolstered the workforce by adding 151,000 jobs, although the future appears uncertain amid President Donald Trump’s threats of a trade war, his reduction of federal staffing, and promises to deport millions of immigrants.
The Labor Department’s report highlights an increase in hiring from January’s revised figure of 125,000, although expectations were set at 160,000 new jobs for the month. Furthermore, the unemployment rate escalated slightly to 4.1% due to the rise in the number of jobless Americans by 203,000.
Industries such as healthcare, finance, and transportation showed employment growth. The federal sector, however, experienced the loss of 10,000 jobs, marking the largest reduction since June 2022, although experts predict Trump’s federal layoff strategy is unlikely to significantly impact the labor market until the March jobs report. The food service industry faced considerable cuts, with restaurants and bars reducing their workforce by nearly 28,000 jobs, adding to the 30,000 positions lost in January.
“The labor market demonstrates resilience, yet we haven’t reached the strength observed a year or two ago,” stated Sarah House, senior economist at Wells Fargo. She anticipates a deceleration in hiring and a slight increase in unemployment, as Trump continues deductions in program spending, trims the federal workforce, and implements tariffs on trade partners.
The potential spillover effects from spending reductions could impact private sectors, affecting contractors and nonprofits. The ongoing trade war presents additional challenges for the labor market in the months to come, explained House.
The economy’s robust recovery following the 2020 pandemic recession triggered an inflation spike peaking in June 2022 with prices surging 9.1% from the previous year. In response, the Federal Reserve increased its key interest rate 11 times throughout 2022 and 2023, elevating it to a level unseen in over two decades.
Despite elevated borrowing costs, the economy defied recession expectations, bolstered by consumer spending, substantial gains in business productivity, and an influx of immigrants easing labor shortages. The U.S. job market, though strong, has cooled from the intense hiring seen between 2021 and 2023. Employers averaged an addition of 168,000 jobs per month last year, down from 216,000 in 2023 and 380,000 in 2022, after a record 603,000 in 2021.
Inflation levels began to ease, dropping to 2.4% by September, prompting the Fed to reverse direction and reduce rates thrice in 2024. Although this trend was expected to persist, inflation progress stagnated since summer, leading the Fed to pause rate cuts.
Average hourly wages increased by 0.3% in the previous month, a slight decrease from January’s 0.4% climb. These labor statistics may buttress the Fed’s cautious stance on further rate cuts, with inflation hovering just above the 2% target. Some Fed officials voice a desire for additional progress before dialing down the benchmark rate.
Continued hiring and a growing economy contribute to the Fed maintaining its current position. However, should layoffs rise and unemployment start climbing, the Fed could face pressure to lower rates.
Fed governor Chris Waller recently suggested a reduction is improbable at the March meeting, emphasizing a need for more data before pursuing further actions.
In contrast, there is optimism in certain sectors. Rick Gillespie, chief commercial officer at Revive Environmental Technology LLC in Columbus, Ohio, remains hopeful for the environmental firm, expecting to expand its workforce shortly, even amid an unpredictable economy. The company plans to recruit 10 to 20 additional employees in Columbus and Grand Rapids, Michigan, soon.
Elsewhere, economic changes spark adjustments. Sheela Mohan-Peterson, who owns a franchise under Patrice & Associates, has noticed an uptick in resumes from high-level executives in biotech and technology fields. These were once uncommon, but the rate has increased recently, prompted by the turbulence in federal spending cuts.
Mohan-Peterson, formerly a biotech attorney and now a recruiter, observed the shifts since acquiring her franchise in 2023. After a booming 2023, 2024 experienced a gradual slowdown, making placement for highly skilled roles increasingly challenging towards the year’s end.
