The jobs report showed payroll gains were just a touch softer than expected last month as the unemployment rate ticked higher. Yet the data largely preceded any disruptive impact of Trump tariffs and layoffs directed by Tesla (TSLA) CEO Elon Musk's Department of Government Efficiency. S&P 500 futures were little changed as stocks look to recover from Thursday's sharp sell-off with the help of a strong earnings report from AI chipmaker Broadcom (AVGO).
The February jobs data doesn't say much about where the economy is going. That's because the jobs report, which is based on mid-month surveys of businesses and households, got a boost as the effects of mid-January's harsh weather and Los Angeles wildfires reversed. Further, DOGE-led federal workforce cuts hadn't yet gathered steam by mid-February and the S&P 500 was still on its ways too new highs as business optimism took precedence over tariff concerns.
↑ X NOW PLAYING This Is How 2025 Jobs Reports Will Impact The Fed And Rate CutsFederal Reserve Chairman Jerome Powell is set to discuss the economic outlook at the University of Chicago Booth School of Business at 12:30 p.m. ET.
Powell has described the labor market as solid. Any hint of a change could send Fed rate cut odds higher.
At the moment, CME Group's FedWatch tool shows that odds of a rate cut at the May 7 Fed meeting have slipped to 46.5% after the jobs report from 52% yesterday.
S&P 500 futures are now pointing 0.2% lower, while the 10-year Treasury yield slid to 4.22%, down from 4.29% on Thursday.
The combination reflects the job report's weak underlying details, including the household survey data showing a jump in people working part-time for economic reasons. That seemed to be corroborated by employer data showing a short workweek.
"The payrolls growth surprised slightly to the downside and the unemployment rate ticked up, justifying the momentum that's been building for a resumption in the Fed's cutting cycle," wrote Lindsay Rosner, head of multi-sector fixed-income investing at Goldman Sachs Asset Management.
Seema Shah, chief global strategist at Principal Asset Management, wrote that the report "does confirm that the labor market is cooling and that it may require some assistance from the Fed in the coming months."
She added: "With no shortage of headwinds confronting the U.S. economy, the softening trend is likely to persist and may potentially deepen, given the toxic combination of federal government layoffs, public spending cuts, and tariff uncertainty."
Shah predicted a "likely short respite in volatility" for markets.
The length of the average workweek was expected to tick up to 34.2 hours, but unexpectedly held at 34.1 hours, matching the lowest level since March 2020. Weather may have been a factor, but the data is seasonally adjusted. The weak print could be an early sign of employers keeping short schedules rather than resorting to layoffs.
Health care and social assistance firms added 63,000 jobs. The goods-producing sector added 34,000, including 19,000 in construction and 10,000 in manufacturing. Retailers cut 6,000 jobs, while the leisure and hospitality sector shed 16,000.
The household survey, which is used to derive the unemployment rate, showed that the ranks of the employed tumbled by 588,000. The labor force, which includes workers and those actively seeking employment, shrank by 385,000. As a result, the ranks of the unemployed rose by 203,000. The recent trend in labor force participation appears to have softened as immigration policy has tightened, and that could continue.
The household data also showed that the number of people working part-time for lack of a full-time opportunity jumped 460,000 to 4.937 million.
S&P 500 futures rose 02% after the 8:30 a.m. ET jobs report. The 10-year Treasury yield edged down to 4.25%, roughly steady from before the report.
Job gains in December were revised higher and January gains were revised lower, with a combined -2,000 impact.
Employers added 151,000 jobs in February, a touch below 160,000 forecasts. The private sector added 140,000 payroll jobs vs. 143,000 forecasts. Government jobs rose by 11,000, even as federal government jobs fell by 10,000 in the first sign of a DOGE effect.
The unemployment rate unexpectedly ticked up to 4.1% from 4%.
Average hourly earnings matched +0.3% expectations, putting 12-month wage growth at 4%.
Economists expect the jobs report to show a payroll increase of 160,000 in February, including 143,000 in the private sector, according to the Econoday consensus. However, forecasts range from 130,000 to 300,000 for headline job growth and 108,000 to 190,000 for net private-sector hiring.
The unemployment rate is seen holding at 4%, while average hourly earnings are forecast to rise 0.3%.
On Thursday, outplacement firm Challenger, Gray & Christmas reported that U.S. employers announced 172,017 planned layoffs, a bit more than double the January total and the highest since July 2020.
The monthly layoff tracker credited 62,242 cuts to the DOGE effect, with cuts announced across 17 federal agencies. The retail sector's 38,956 announced layoffs were the second biggest contributor.
However, Labor Department data shows that fewer than 1,000 federal civilian workers claimed jobless benefits in the week through Feb. 15. That means most DOGE job cuts came too late to impact the February jobs report.
Ahead of the jobs report, markets were pricing in just 9% odds of a rate cut at the March 19 Federal Reserve meeting. But concerns about slowing growth have boosted rate-cut odds to 47.5% for the May 7 Fed meeting.
Markets are pricing in strong odds (68%) of at least 75 basis points in Fed rate cuts this year.
S&P 500 futures are up 0.1% in early Friday stock market action ahead of the jobs report. That follows Thursday's 1.8% sell-off for the S&P 500, which left it 6.6% below the Feb. 19 all-time closing high.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
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