Labour Market
U.S. job growth slowed, full-time jobs plunged, part-time surged, and government cuts loom, raising concerns over job quality and economic resilience.
The U.S. labour market exhibited signs of softening in February, with non-farm payrolls increasing by 151,000, falling short of the 160,000 consensus estimate and accompanied by downward revisions to previous months. The unemployment rate edged up to 4.1%, while average weekly hours remained subdued at 34.1, highlighting ongoing labour market fragility. Wage growth aligned with expectations at +0.3% MoM and +4.0% YoY. However, job quality remains a key concern, as full-time employment declined by 1.2 million, partially offsetting January’s near-record 2.4 million surge (post-revisions), while part-time jobs rose by 610,000. Since January 2023, only 13% of job creation has occurred outside leisure and hospitality, government, and private education and healthcare—sectors, typically characterized by lower wages, job insecurity, and a higher prevalence of part-time roles. In contrast, hiring in high-value sectors such as technology, construction, manufacturing, business services, and transport & logistics has remained weak. The Department for Government Efficiency’s (DOGE) fiscal consolidation efforts have begun weighing on employment, with federal payrolls contracting by 10,000—the steepest decline since mid-2022—while private sector hiring grew by 140,000, led by gains in trade & transport (+21,000) and financial services (+21,000). Notably, the leisure and hospitality sector posted its second consecutive monthly contraction, likely due to adverse weather conditions.
Given these data and the resurgence of inflation, we expect the Fed to maintain its current policy stance and hold rates steady. Additionally, as DOGE-driven fiscal tightening accelerates, rising federal job losses and potential cutbacks in private contractors dependent on government spending could further strain labour market conditions.