The American job market is looking brighter this year than it did in a gloomy 2025.
The Labor Department is expected to report Friday that U.S. companies, nonprofits and government agencies added 60,000 jobs last month. That would be down from an unexpectedly strong 130,000 in January. But it would mark considerable improvement over the monthly average of just 15,000 new jobs in 2025, weakest hiring since the COVID-19 recession year 2020.
The unemployment rate is forecast to have stayed at a low 4.3% last month, according to a survey of forecasters by the data firm FactSet.
The Bank of America Institute said Wednesday that its data – drawn from anonymized customer accounts – also showed solid hiring in February for the second straight month – expanding 1.3% last month on top of a 0.8% gain in January. “Job market growth is gaining traction,” David Tinsley, a senior economist at the Bank of America Institute, told reporters Wednesday. “February’s numbers show real forward momentum.”
Likewise, a private report on Wednesday by payroll processor ADP showed that companies added 63,000 jobs in February, the most since last July.
The Labor Department report is likely to show that February hiring was hampered by frigid winter weather and a four-week strike by nurses and other front-line workers at Kaiser Permanente in California and Hawaii, which probably shaved more than 30,000 jobs off last month’s payrolls. Some economists also suspect that the solid January jobs figures were overstated and are likely to be revised lower in Friday’s report.
The outlook for the job market – and the entire economy – is clouded by the war with Iran.
Employers were reluctant to hire last year because of uncertainty over President Donald Trump’s tariffs – and the unpredictable way he rolled them out.
High interest rates, engineered by the Federal Reserve to combat a burst of inflation following the COVID-19 pandemic, also weighed on the job market in 2025.
The impact of Trump’s aggressive trade policies may recede in 2025. His import taxes became smaller and less erratic after he reached a trade truce last year with China and deals with leading U.S. trade partners such as Japan and the European Union. A lot of businesses have also learned how to offset the costs of the tariffs, often by passing them along to customers via higher prices.
Businesses needed “a year to bake some of those costs into their business model, and now it’s time to get back to growth mode,’’ said Andy Decker, CEO of Atlanta-based Goodwin Recruiting.
The Supreme Court has also struck down the biggest and boldest of Trump’s tariffs – though he is planning to replace them.
Still, hiring continues to lag far behind the hiring boom of 2021-2023 when the economy was bouncing back from pandemic lockdowns and the United States was adding nearly 400,000 jobs a month. Many economists describe today’s job market as “no-hire, no-fire’’: Companies are reluctant to add workers but don’t want to let go of the ones they have.
Luckily, achieving good-enough job growth is easier these days.
Until a year or two ago, employers needed to hire well over 100,000 people a month to keep the unemployment rate from rising.
But Baby Boomer retirements and President Donald Trump’s deportations mean there are fewer people competing for work. So the break-even point is much lower – anywhere from zero to 50,000 jobs a month, said Joe Brusuelas, chief economist at the tax and consulting firm RSM. “Under the current conditions, 70,000 should be considered solid,’’ he said.
Companies may be holding off on hiring as they buy, install and figure out how best to use new technologies, including artificial intelligence. AI, after all, potentially means they “can do more with less’’ and will need fewer workers, especially for entry-level positions, Brusuelas said.
They are thinking, he said, “we’ve invested an awful lot of money in (capital expenditures), and we need to see how much we can produce with our current labor force… The last thing you want to do is hire a lot of young people and then let them go.’’
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AP Economics Writer Christopher Rugaber contributed to this report.
