• The US added 151,000 jobs in February, fewer than expected.
• Unemployment unexpectedly ticked up to 4.1% from 4%.
• The new data will be useful for the Federal Reserve to decide whether to keep interest rates steady.

The job market was just a touch cooler than expected in February, as new job creation clocked in at 151,000, and unemployment unexpectedly increased to 4.1%.

The job growth forecast was 159,000, and unemployment was expected to be at the same rate as January’s 4%. Unemployment has been between 4% and 4.2% since May.

“We’re still very much in a bifurcated labor market where your job opportunities are going to largely depend on what type of work it is you’re doing,” Cory Stahle, an economist at the Indeed Hiring Lab, told Business Insider.

Economic data like unemployment is useful for the Federal Reserve to determine what to do next with interest rates. The Federal Open Market Committee is meeting later this month, following their most recent decision to hold rates steady in January. Since then, two jobs reports and other data releases, such as reports about consumer confidence and prices, have given further insight into the economy’s performance.

“Labor market conditions have cooled from their formerly overheated state and remain solid,” Fed chair Jerome Powell said in the semiannual testimony before the Senate Committee on Banking, Housing, and Urban Affairs in February.

Revisions to job growth from earlier reports were minor. January’s job creation was revised from 143,000 to 125,000. December’s job gain was revised from 307,000 to 323,000.

Labor force participation, which includes people working or actively seeking work, dropped to 62.4% in February from 62.6% in January. The employment-population ratio decreased to 59.9% from 60.1%.

Wage growth was fairly steady last month. Average hourly earnings increased 4% from a year prior, from $34.54 in February 2024 to $35.93 this past February, similar to January’s year-over-year growth of 3.9%.

Based on traders’ expectations, CME FedWatch showed a 95% chance the Fed decides in its meeting on March 18 and 19 to do another interest-rate hold, an increase from the 91% chance before the new jobs report.

“It’s a report that shows signs of softening, but not of any kind of collapse,” Julia Pollak, chief economist at ZipRecruiter, said. “Given the enduring concerns about inflation, I think this will likely be a welcome report for the Fed.”

The jobs report gives people insight into which sectors have had particularly strong growth and where demand is lacking. Federal government employment fell by 10,000. While many federal agencies cut jobs in February, most of those cuts will show up in next month’s report because of the timing of data collection. Still, Stahle said it is concerning that the decline is being reflected already, given that federal employment is likely going to fall even further in coming reports.

Gregory Daco, EY’s chief economist, told BI that the terminations of federal workers “will undoubtedly impact the March payrolls print, but we don’t know by how much.” That report will be published on the first Friday in April.

Meanwhile, Stahle said there are still many job opportunities in healthcare, while software development isn’t hiring a lot. Healthcare and social assistance employment increased by 63,100 in February, and financial activities employment increased by 21,000. Manufacturing employment increased by 10,000, the first uptick for that sector since November. Employment fell in retail trade and leisure and hospitality.

While economists have described the job market as strong recently and said the US hasn’t entered a recession, Americans are worried about the economy.

“While headline job market measures remain strong, economic anxiety is on the rise among workers as uncertainty about inflation and job security abounds,” Daniel Zhao, lead economist at Glassdoor, told BI before the new jobs report was published. “The trajectory of the labor market remains highly uncertain for the rest of 2025, which is leaving workers uneasy and the picture for the overall economy murky.”

Uncertainty around a potential trade war, including retaliatory tariffs, could also affect the US economy. President Donald Trump imposed new tariffs on Mexico, Canada, and China earlier this week, although many of those were delayed until April 2 as of Thursday afternoon. The threat of tariffs could affect business planning and demand for workers.

“Steep tariff increases could cause adjustments in business decisions with knock-on effects on hiring and wages as business leaders navigate higher input costs and retaliatory measures,” Lydia Boussour, senior economist at EY, said.