The US labour market likely continued to add jobs in February, but concerns over trade policies, immigration crackdowns, and federal job cuts are creating an increasingly uncertain outlook.
Economists expect the upcoming Labour Department report to show an addition of 160,000 jobs, up from 143,000 in January, with the unemployment rate holding steady at 4%.
Despite resilience in hiring, businesses are navigating shifting economic conditions, including the Trump administration’s tariff threats and workforce reductions in federal agencies, which could shape employment trends in the coming months.
Hiring stays strong despite pressures
Despite growing economic headwinds, job creation has remained stable.
Employers added an average of 166,000 jobs per month in 2024, a slowdown from 216,000 in 2023 and significantly lower than the 603,000 monthly average recorded in 2021 during the post-pandemic economic recovery.
The February job figures are expected to reflect continued momentum in hiring, particularly in the leisure and hospitality sectors, which rebounded after disruptions caused by wildfires in Los Angeles earlier this year.
The ongoing economic expansion has persisted despite high interest rates, which were initially expected to trigger a slowdown.
The Federal Reserve raised its benchmark interest rate 11 times between 2022 and 2023 to counter inflation, bringing it to its highest level in more than two decades.
However, the economy demonstrated resilience due to strong consumer spending, improved productivity, and increased immigration, which helped ease labour shortages.
Inflation fell to 2.4% in September 2024, allowing the Fed to cut rates three times last year, but further reductions have been delayed as inflationary pressures persist.
Federal cuts and trade risks
The Trump administration’s recent workforce reductions at federal agencies are not expected to impact the February employment report, as the Labour Department’s survey was conducted before the job losses took effect.
However, these cuts are expected to make a visible dent in payroll data for March and beyond.
At the same time, the administration’s approach to trade policy is creating additional challenges for businesses.
Proposed tariff increases on imported goods could lead to rising production costs, which may influence hiring and wage decisions.
Economists caution that such measures could slow job creation, reduce disposable income, and increase inflationary risks.
If businesses react by cutting costs, the impact could be felt across multiple sectors, potentially leading to a more severe labour market slowdown.
Wage growth slows
Economists anticipate that workers’ average hourly earnings rose by 0.3% in February, a decline from the 0.5% increase recorded in January.
While this slowdown in wage growth may be welcomed by the Federal Reserve as a sign of easing inflationary pressure, it is unlikely to prompt an immediate rate cut at the central bank’s next meeting on March 18-19.
Market analysts tracking the Federal Reserve’s decisions indicate that Wall Street traders are not expecting another rate cut until at least May, with uncertainty surrounding inflation trends.
If inflation remains persistent, further delays in rate reductions could affect business investment and hiring decisions in the months ahead.
As economic pressures mount, employers and job seekers alike will be closely watching how policy decisions shape the trajectory of the US labour market.
With trade disputes, government job cuts, and wage fluctuations all playing a role, the stability of the employment sector remains a key concern for the broader economy.
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