US employers added solid 151,000 jobs last month, but the outlook is cloudy as President Donald threatens a trade war, purges the federal workforce and promises to deport millions of immigrants.
The labour Department reported on Friday that hiring was up from a revised 125,000 in January. Economists had expected 160,000 new jobs last month.
The unemployment rate rose slightly to 4.1% as the number jobless Americans rose by 203,000.
Employment rose in healthcare, finance and transportation and warehousing.
The federal government shed 10,000 jobs, the most since June 2022, though economists don’t expect Trump’s federal layoffs to have much of an impact until the March jobs report.
Restaurants and bars cut nearly 28,000 jobs last month on top of a loss of almost 30,000 in January.
“The labour market continues to hold up, but we’re still a far cry from where we were a year or two years ago,’’ said Sarah House, senior economist at Wells Fargo.
House expects hiring to slow and unemployment to creep higher as Trump continues to cut spending on programs and slash the federal workforce, while imposing tariffs on America’s trading partners.
The spending cuts “are likely to spill over into the private sector, hitting contractors and nonprofits, and we still have a trade war that is picking up,’’ House said. “There are multiple battles for the labour market to fight off, multiple shocks it’s having to work through in the months ahead.’’ The economy’s unexpectedly strong recovery from the pandemic recession of 2020 set loose an inflationary surge that peaked in June 2022 when prices came in 9.1% higher than they’d been a year earlier.
In response, the Federal Reserve raised its benchmark interest rate 11 times in 2022 and 2023, taking it to the highest level in more than two decades. The economy remained sturdy despite the higher borrowing costs, defying expectations of a recession, thanks to strong consumer spending, big productivity gains at businesses and an influx of immigrants who eased labour shortages.
The American job market has remained remarkably resilient, but it has cooled from the red-hot hiring of 2021-2023. Employers added a decent average of 168,000 jobs a month last year. But that was down from 216,000 in 2023, 380,000 in 2022 and a record 603,000 in 2021 as the economy rebounded from COVID-19 lockdowns.
Inflation came down – dropping to 2.4% in September − allowing the Fed to reverse course and cut rates three times in 2024. The rate-cutting was expected to continue this year, but progress on inflation has stalled since summer, and the Fed has held off.
Average hourly earnings rose 0.3% last month, down from a 0.4% increase in January.
Fed officials will likely see the figures as supporting their current wait-and-see approach toward interest-rate cuts. With inflation still modestly above the Fed’s 2% target, several have made clear in recent remarks that they would like to see more progress before cutting their benchmark rate any further.
Steady hiring and an expanding economy make it easier for the Fed to stay on the sidelines. Should companies start laying off workers and the unemployment rate rise, pressure could rise on the Fed to cut rates.
On Thursday, Fed governor Chris Waller suggested a cut was unlikely at the central bank’s March meeting, adding that Fed officials would like to see more data before making any further moves.
Rick Gillespie, chief commercial officer at Columbus, Ohio-based Revive Environmental Technology LLC, said he is bullish about the prospects for the environmental contamination mitigation and water treatment company despite the uncertain economy.
Revive, which currently has 34 full-time employees, plans to add a total of another 10 to 20 workers in Columbus, Ohio and Grand Rapids, Michigan, in the next few months, Gillespie said. Revive has found a way to destroy a toxic chemical called PFAS that is found in everyday items like nonstick cookware, waterproof weather jackets and cell phones and can end up in landfills, drinking water, and industrial waste water.
Others are seeing a shakeout in the economy.
Sheela Mohan-Peterson, who owns a franchise of the Patrice & Associates recruiting firm, said she’s starting to get more resumes from top-level executives who worked at biotech and high tech companies. “We’re talking C Suite level’’ – chief financial officers, chief technology officers, even a couple of CEOs, she said. She used to get maybe one of those resumes a month. Since the end of last year, she’s seeing one or two a week. “It has definitely accelerated in the last month,’’ she said. Mohan-Peterson believes its fallout from the chaotic federal spending cuts.
Associated Press
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