US unemployment rate at 4.1%
Today’s jobs report shows that the US unemployment rate has risen to 4.1%, up from 4% in January.
That’s still pretty low in historic terms, taking the jobless rate back up to its level in December.
As the BLS point out, the US unemployment rate has remained in a narrow range of 4.0 percent to 4.2 percent since May 2024.
Key events
Donald Trump’s flip-flopping over tariffs is causing chaos for farmers and food producers on both sides of the US-Canada border, Bloomberg reports.
Trump slapped 25% tariffs on most Canadian and Mexican goods on Tuesday, only to then delay the new duties on many products on Thursday,
“This is the biggest challenge we’ve ever faced and I’ve been doing this for over 20 years,” said John Nickel, a Manitoba hog producer who sells exclusively to the US.
His first of two weekly shipments of piglets crossed the border tariff-free on Monday, but he doesn’t know whether a 25% markup will appear on the invoice for the animals he sent Thursday morning. More here.
Wall Street has reversed its earlier small fall:
U.S. STOCK INDEXES TURN POSITIVE; S&P 500 UP 0.3%, NASDAQ UP 0.5%, DOW UP 0.2%
— First Squawk (@FirstSquawk) March 7, 2025
Reuters: Recession risks rise for all three North American economies over US tariff chaos
Donald Trump’s threatened trade war against Mexico and Canada risks dragging both countries into recession, and the US with it, economists fear.
A Reuters poll of economists across North America found that the risks to the Mexican, Canadian and American economies are piling up, and that the chaotic implementation of U.S. tariffs that has created deep uncertainties for businesses and decision-makers.
Reuters polled 74 economists across Canada, the U.S. and Mexico, and 70 said that the risk of a recession in their respective economy had increased.
Donald Trump threatens Russia with additional sanctions and tariffs
Donald Trump has another target for tariffs – Russia.
On his Truth Social site, the US president has just threatened to impose new sanctions on Moscow unless a peace deal with Ukraine is agreed soon.
Trump, who has faced criticism for being much harder on Ukraine then Russia, writes:
Based on the fact that Russia is absolutely “pounding” Ukraine on the battlefield right now, I am strongly considering large scale Banking Sanctions, Sanctions, and Tariffs on Russia until a Cease Fire and FINAL SETTLEMENT AGREEMENT ON PEACE IS REACHED.
To Russia and Ukraine, get to the table right now, before it is too late. Thank you!!!
Wall Street opens down, again
Today’s jobs report hasn’t changed the mood on Wall Street, it seems.
Stocks have opened in the red, adding to losses yesterday as trade war fears rattle investors’ nerves.
The Dow Jones industrial average has dipped by 138 points, or 0.33%, to 42,440 points.
The broader S&P 500 index is also slightly lower, down 0.12%, while the tech-focused Nasdaq Composite is flat.
We’ll probably have to only wait a month to see the impact of Elon Musk’s axing of federal government services in the jobs data.
Sara Pineros, economist at the CEBR thinktank, predicts March’s non-farm payroll (due on 4 April), will include a DOGE effect.
Pineros says:
Nonfarm payroll employment in the US increased by 151,000 in February, falling short of expectations, while the unemployment rate edged up slightly to 4.1%. These were the first full-month figures under the new Trump administration and come amidst large-scale cuts to federal government jobs by the Department of Government Efficiency (DOGE).
However, these cuts did not influence the February data much, as they mostly commenced after the mid-month snapshot. They will instead be evident in the March data published next month.
Beyond the impact of government job cuts, Cebr expects the ongoing uncertainty around US economic policy, specifically tariffs, to pose a downside risk to the labour market and the wider economy in the coming months.”
US jobs report: what the experts say
The US jobs market is “still in decent shape” argues Thomas Ryan, North America economist at Capital Economics:
The modest 151,000 rise in non-farm payrolls in February and 0.1%-point rise in the unemployment to 4.1% confirms the economy started the year soft but is not plummeting towards a recession.
Some of those fears may resurface in the March Employment Report, when recent federal government layoffs will be a much larger drag on employment than they were last month. But with private-sector hiring still running at a fairly healthy three-month average pace of 169,000, it suggests the labour market can handle it.
Neil Birrell, chief investment officer at Premier Miton Investors, says the jobs report could allay some fears over the health of the US economy:
The earnings number was solid as well, which is supportive for the consumer sector. Clearly we need to see more evidence on lay-offs in the public sector and to understand what impact they will have overall, but this number means we can breathe more easily as we go into the weekend.
Richard Flynn, managing director at Charles Schwab UK, calls the report “disappointing”, though:
“Today’s jobs figures are below expectations, indicating that demand in the labour market is lower than anticipated.
This disappointing news comes at a time when the market is in need of a pick-me-up. Bearish sentiment has begun to grow as new tariffs have prompted concerns about the outlook for economic growth and a spike in initial jobless claims figures last week called into question the health of the labour market. Today’s numbers may be seen to reinforce anxieties on both fronts. With investors already concerned about a growth slow down, we will likely see greater sensitivity to economic data in the coming days and weeks.
As a result, this report could further weigh on the market after a forlorn February.”
This may sent alarm bells ringing: The number of Americans employed part time for economic reasons increased by 460,000 to 4.9 million in February.
These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs.
Heather Long, economic columnist at the Washington Post, says this can be an “early warning sign” of a weakening economy:
One worrying sign in February jobs report =
People working part-time for “economic reasons” (meaning they could not find a full-time job) jumped by +460,000 to 4.9 million.This metric can be an early warning sign.
It’s currently at the highest level since May 2021. pic.twitter.com/Ul2AE02TWp— Heather Long (@byHeatherLong) March 7, 2025
Where were the 151,000 new jobs created?
Here’s a breakdown of some of the sectors of the US economy that added jobs in February.
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Health care added 52,000 jobs in February
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Employment in financial activities rose by 21,000, although commercial banking lost 5,000 jobs.
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Transportation and warehousing employment rose by 18,000,.
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Employment in social assistance rose by 11,000
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Warehouse clubs, supercenters, and other general merchandise retailers added 10,000 jobs.
But there were losses in other sectors too:
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Within government, federal government employment declined by 10,000 in February.
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Employment in retail trade fell by 6,0000
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Employment in food and beverage retailers declined by 15,000, “largely due to strike activity”.
151,000 jobs gained in February. A solid number.
January was revised down by 18k to 125,000.
–>Healthcare continues to be the big hiring driver. A large cut to Medicaid could really hurt that.Health care +52,000
Financial +21,000
Local gov’t +20,000
Construction +19,000…— Heather Long (@byHeatherLong) March 7, 2025
US dollar hits election low after jobs report
The US dollar is continuing its recent swoon, after the US added slightly fewer jobs than expected in February.
Following today’s news that payrolls rose by 151,000, and the jobless rate rose, the dollar dropped further against other major currencies.
The euro is now up 0.7 of a cent today at $1.0853, adding to earlier gains and seemingly cementing this week as its best against the dollar in 16 years.
The dollar has also weakened against the Japanese yen, to 147.29 yen to the dollar.
This has pulled the US dollar index down by 0.37% today, to its lowest level since 5 November – the day of the presidential election…
It’s not unusual for non-farm payroll data to be revised.
And this month, we have upward revisions to December’s data, wiped out by a trimming of January’s jobs growth.
The report says:
The change in total nonfarm payroll employment for December was revised up by 16,000, from +307,000 to +323,000, and the change for January was revised down by 18,000, from +143,000 to +125,000.
With these revisions, employment in December and January combined is 2,000 lower than previously reported.
Average hourly earnings up 4% per year
Happily for US workers, wages continues to rise last month.
The jobs report says:
In February, average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3 percent, to $35.93. Over the past 12 months, average hourly earnings have increased by 4.0 percent.
Another disappointing aspect of today’s US jobs report is that the labor force participation rate fell last month, from 62.6% to 62.4%.
That means fewer people were either in work or looking for a job (and had thus dropped out of the labor market altogether).
US unemployment rate at 4.1%
Today’s jobs report shows that the US unemployment rate has risen to 4.1%, up from 4% in January.
That’s still pretty low in historic terms, taking the jobless rate back up to its level in December.
As the BLS point out, the US unemployment rate has remained in a narrow range of 4.0 percent to 4.2 percent since May 2024.
At 151,000, job creation in February is weaker than the average monthly gain of 168,000 over the prior 12 months – the last year of Joe Biden’s presidency.
Federal government employment declined by 10,000 in February.
Today’s jobs report shows that federal government employment declined by 10,000 in February.
That could that be an early impact of Elon Musk’s DOGE programme, which has led to layoffs at a number of US federal agencies in recent weeks
US jobs report released
NEWSFLASH: Hiring across the US economy picked up slightly at the start of Donald Trump’s second term in office.
The US economy added 151,000 new jobs in February, the latest non-farm payroll report shows, slightly below the 160,000 expected by economists.
But that’s a pick-up compared to January – payroll growth that month has been revised down to 125,000, from 143,000 first reporter.
The Bureau of Labor Statistics reports:
Employment trended up in health care, financial activities, transportation and warehousing, and social assistance. Federal government employment declined.
Peter Berezin, chief global strategist and director of research at BCA Research, suggests the markets don’t actually expect the jobs report to come in close to the consensus (for a 160,000 rise in payrolls):
I don’t think the market is expecting anything close to the 160K consensus for NFP. Anything above 100K would be a “beat”.
— Peter Berezin (@PeterBerezinBCA) March 7, 2025
Ahead of the US jobs report in 10 minutes, Derren Nathan, senior equity analyst at Hargreaves Lansdown, says:
“It’s not just Elon Musk’s public sector efficiency drive that’s impacting (the job market). Cuts are also being felt in retail and technology.
“While weaker (jobs) data may support the case for further Fed rate cuts, job creation remains a key engine of economic growth.”
