Unemployment Rate Rises Slightly to 4.1 Percent

March 7, 2025 – Employment rose by 151,000 in February as the U.S. unemployment rose slightly to 4.1 percent, according to the most recent U.S. Bureau of Labor Statistics report. The number of unemployed persons was 7.1 million in February. Employment trended up in healthcare, financial activities, transportation and warehousing, and social assistance. Federal government employment declined.

“Today’s jobs figures are below expectations, indicating that demand in the labor market is lower than anticipated,” said Richard Flynn, managing director at Charles Schwab. “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 labor 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.”

Among the major worker groups, the unemployment rate for Whites (3.8 percent) increased in February. The jobless rates for adult men (3.8 percent), adult women (3.8 percent), teenagers (12.9 percent), Blacks (6.0 percent), Asians (3.2 percent), and Hispanics (5.2 percent) showed little change over the month.

The number of long-term unemployed (those jobless for 27 weeks or more), at 1.5 million, changed little in February. The long-term unemployed accounted for 20.9 percent of all unemployed people. The employment-population ratio decreased by 0.2 percentage point to 59.9 percent in February but showed little change from a year earlier. The labor force participation rate, at 62.4 percent, changed little over the month and over the year.

The number of people 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.

The number of people not in the labor force who currently want a job increased by 414,000 to 5.9 million in February. These individuals were not counted as unemployed because they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job.

Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force, at 1.7 million, changed little in February. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the four weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, decreased by 128,000 to 464,000 in February. 

Where Job Growth Occurred

• Healthcare added 52,000 jobs in February, in line with the average monthly gain of 54,000 over the prior 12 months. In February, job growth continued in ambulatory healthcare services (+26,000), hospitals (+15,000), and nursing and residential care facilities (+12,000).

• Employment in financial activities rose by 21,000 in February, above the prior 12-month average gain (+5,000). Over the month, employment continued to trend up in real estate and rental and leasing (+10,000) and insurance carriers and related activities (+5,000). Commercial banking lost 5,000 jobs.

• Transportation and warehousing employment continued to trend up in February (+18,000), in line with the average monthly gain over the prior 12 months (+13,000). Over the month, job growth occurred in couriers and messengers (+24,000) and air transportation (+4,000).

• Employment in social assistance continued to trend up in February (+11,000), below the average monthly gain over the prior 12 months (+21,000). Over the month, employment continued to trend up in individual and family services (+10,000).

• Within government, federal government employment declined by 10,000 in February. Employment in retail trade changed little over the month (-6,000) and has shown little net change over the year. In February, employment in food and beverage retailers declined by 15,000, largely due to strike activity. Warehouse clubs, supercenters, and other general merchandise retailers added 10,000 jobs.

• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; information; professional and business services; leisure and hospitality; and other services.

Hiring Hesitancy In the Private Sector 

Other new data revealed that private sector hiring slowed significantly in February and fell short of Wall Street’s expectations, adding to concerns that the U.S. economy is losing steam. Jobs added fell far short of economists’ estimates of 140,000 — and significantly lower than the 186,000 jobs added in January. January’s number of job additions was revised up from a prior reading of 183,000. February’s data marked the largest month-over-month decline in private payroll additions since March 2023.

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Private sector employment increased by 77,000 jobs in February and annual pay was up 4.7 percent year-over-year, according to the February ADP National Employment Report produced by ADP Research in collaboration with the Stanford Digital Economy Lab. 

“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” said Nela Richardson, chief economist, ADP. “Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”

“We saw the same downshift in the labor market that is reflective of the overall economy,” Ms. Richardson told Yahoo Finance during a call with reporters. “We saw a decrease in spending in the consumer side in January, and so we’re seeing those industries tied to consumer, like retail sales, feel that same kind of inflection point downward.”

Ms. Richardson noted that any further deterioration in the consumer will be key to watch throughout 2025 for signs of an economic slowdown. For now, she argues the data points to early signs of slowing versus flashing major warning signs.

“Even with the latest jobs report, I still am in the healthy labor market camp,” Ms. Richardson said. “That doesn’t mean that every part of the labor market is healthy, and some are flashing yellow lights a little stronger and longer than others.”

“The bottom line is that any slowdown in hiring will ultimately have its roots in D.C.” said Scott A. Scanlon, co-founder and CEO of Hunt Scanlon Ventures, a Greenwich, Conn.-based M&A advisor. 

“You can’t turn tariffs on and off on a whim, you can’t mess around with well-established trade agreements without a well-thought-out replacement plan, and you can’t take a blow torch to government agencies and fire hundreds of thousands of Federal workers without dire consequences to the long-term health and well-being of the American economy,” he said. 

“I am not sure anyone voted for an arsonist to take over and burn the house down, but that’s what we’ve got,” he added.

Related: Predicting Talent Acquisition Trends for 2025

Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor  – Hunt Scanlon Media