The U.S. added 275,000 jobs in February as the unemployment rate rose to 3.9 percent, according to data released Friday by the Labor Department.
The February jobs report defied the expectations of economists, who projected a gain of 200,000 jobs with the jobless rate staying even at 3.7 percent, according to consensus estimates.
The February jobs report comes one day after President Biden sought to highlight the rapid recovery of the U.S. economy and his investments in its long-term future during the State of the Union address Thursday night.
Biden has struggled to turn strong economic data into support of his handling of the economy with less than eight months until the election, where he is likely to face a rematch with former President Trump.
In his Thursday speech, Biden touted the record-busting job growth and surge in manufacturing activity during his presidency while bashing the press for ignoring “the greatest comeback story never told.”
Despite inflation reaching 40-year highs and the rapid Federal Reserve rate hikes that followed, the U.S. economy has remained remarkably strong under Biden. The jobless rate has been below 4 percent for the longest stretch since November 1969, and the U.S. is faring far better than other nations in recovering from the economic blow of the pandemic.
“The economy is growing at a healthy, sustainable, solid, strong pace,” Federal Reserve Chair Jerome Powell said during a Thursday hearing of the Senate Banking Committee.
“We’re doing the best of anybody. We’ve got the strongest growth and the lowest inflation of the advanced economies,” he said.
While Fed officials ended 2023 with expectations of cutting interest rates as soon a March, Powell said the resilience of the U.S. economy has stalled those plans. Cutting interest rates from their current baseline of 5.25 to 5.5 percent could add fuel to a U.S. economy that has burned hotter than expected for years.
“The broad jobs report is somewhat market positive. If the economy can continue to add jobs but without triggering a resurgence in wage growth, the Fed will achieve its soft landing,” said Seema Shah, chief global strategist at Principal Asset Management.
“The Fed does, however, still need to tread cautiously and so today’s report doesn’t change our view that the first hike will come around mid-year, no earlier.”
Shah also noted some weak spots in the February jobs report that could point to signs of an impending slowdown, even after stronger-than-expected job gains.
Along with a higher unemployment rate, February brought weaker-than-expected wage growth and no major increases to the size of the labor force. The Labor Department also shaved 43,000 jobs off of the December jobs report and 124,000 jobs off of the January jobs report, revising the total number of jobs added in 2024 down by 167,000.
“The February jobs report showed strong overall payroll gains, but a higher unemployment rate. After a series of exceptionally strong labor market reports that threatened to disrupt the expected easing of monetary policy, this data serves as a warning to those concerned about the inflationary pressure on the U.S. economy and the potential impact on interest rates,” Glassdoor chief economist Aaron Terrazas said in a Friday analysis.
Updated at 9:15 a.m. ET