Washington (AFP) – The United States added fewer jobs than expected in February and unemployment ticked up, government data showed Friday, while analysts warn cracks may be appearing in the labor market under President Donald Trump’s new administration. Friday’s report paints a solid picture of the employment market in the first full month of Trump’s second term, amid unprecedented cuts to the US government that are attracting growing blowback.
But analysts warned of uncertainty ahead linked to Trump’s volatile tariffs policy, and cautioned that effects from the administration’s cost-cutting have yet to show up entirely. The world’s biggest economy added 151,000 jobs last month, up from January’s revised 125,000 figure, while the unemployment rate edged up to 4.1 percent from 4.0 percent, the Labor Department said. “Within government, federal government employment declined by 10,000 in February,” it said.
The federal downsizing efforts have been led by Trump’s billionaire adviser Elon Musk and his Department of Government Efficiency (DOGE), which has slashed thousands of jobs and upended agencies, prompting a flurry of lawsuits. Federal Reserve Chair Jerome Powell nevertheless said at an event in New York that the labor market remains solid, with wages growing faster than inflation.
The White House was quick to emphasize an uptick in manufacturing jobs, with Trump himself touting “major gains” and pointing to an added 9,000 jobs in the auto industry. “We’re trying to shrink government and grow the private sector,” the president said. The Trump administration has expressed plans to “re-privatize and re-industrialize the American economy,” according to Treasury Secretary Scott Bessent, alongside wider efforts towards deregulation and fair trade. The Republican president has launched a broad offensive aimed at cutting public spending and reducing the federal government’s footprint — pledges he made on the campaign trail.
Yet the full hit from Trump’s federal workforce cuts is not necessarily reflected in the February report, given the payroll survey was likely conducted “too early in the month,” said EY senior economist Lydia Boussour this week. “We expect a more visible dent to federal payrolls in March and subsequent months,” she added. Pantheon Macroeconomics noted this week that the return of more seasonally normal weather had likely boosted payroll growth.
The Alliance for American Manufacturing (AAM) cheered February’s factory job gains but warned of “a very uncertain future,” with Trump recently unveiling a volley of tariffs and threats on both allies and adversaries. AAM President Scott Paul said in a statement that the manufacturing sector had been stalled for 30 months. He called for a “responsible and orderly application of new tariffs, particularly on China and other countries with persistent unfair trade practices.”
On Tuesday, Trump’s steep tariffs on major US trading partners Canada and Mexico took effect, roiling markets. The president has since walked back some of these moves with temporary exclusions for imports covered by a North American free trade pact. Pantheon Macroeconomics cautioned that “cracks are appearing in the labor market,” citing a separate report this week from outplacement and coaching firm Challenger, Gray & Christmas.
That report noted tens of thousands of government job cuts, but also flagged significant private sector layoffs, many of them in the retail and consumer products industries. For Pantheon, that hints at the impact of “heightened uncertainty around trade policy.” ZipRecruiter chief economist Julia Pollak flagged signs of “softening” in the market, with a shortening of the work week and rise in the number of workers “forced into part-time jobs.” Some employers may be avoiding layoffs but cutting back on hours, she noted.
Pollak said the Fed will “likely welcome signs of a cooling job market, but policymakers will also be watching for signs that the softening is turning into something more serious.” Friday’s Labor Department report also showed that wage gains cooled to 0.3 percent from January to February, although compared with a year ago, earnings were still 4.0 percent up.
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