The Line: Job Growth Lower than Expected in February

Payrolls rose by 151,000 last month, below the 170,000 Dow Jones forecast. Not the best news in the world, but certainly not the worst.

Here are the other headlines of the report:

The unemployment rate ticked up to 4.1% from 4.0%.
The largest job gains were in health care (+52,000) and financial activities (+21,000).
Job growth in December and January was revised downward by a total of 2,000.
Wages rose 0.3% last month, which was in line with expectations.
Over the past year, wages are up 4%, slightly lower than the 4.2% forecast.

Those are the facts, now for some analysis.

While below expectations, payroll growth remains close to the 168,000 monthly average of the past 12 months. For those of you wondering if DOGE reductions of federal workers played a big part in the lower-than-expected number, the answer is no. The number of federal workers did tick down by 10,000 in February, but since this data was collected on the 12th of the month and layoffs started right after that, it’s not an accurate picture of the total number of federal jobs lost.

The slight increase in the unemployment rate last month may not seem like a big deal, until you realize that it’s due to a 588,000 decline in employment according to the household survey. Remember that payroll data is used each month to calculate job growth and wage data, but the household survey is what’s used to calculate the unemployment rate. The fun part is that the payroll and household surveys can show big differences in each month, and February was no exception. We tend to go with the payroll number, as it’s based on a much larger data sample.

To sum up:

Job growth was decent last month, although I expect a big downward revision next month to account for the reduction in federal jobs that didn’t get going until the second half of February.
Wages are still growing at a decent pace, but it’s worth noting that prices rose 0.5% in January—February’s CPI data comes out next week—higher than the 0.3% February wage increase.
Nothing in this report will get the Fed to touch rates when they meet later this month.
To end on the highest note possible, let’s take a quick look at mortgage rates.

Mortgage Rates Fall Again

That’s always a happy thing to say. The average 30-year mortgage rate has declined for seven weeks in a row to 6.63%, and sits at its lowest level since December. You can thank all the panic over tariffs that shifted people from stocks to bonds for bringing mortgage rates down. I’m not saying I’m rooting for more turmoil, but the thought does cross my mind occasionally.