Slower US job growth expected in February; unemployment rate forecast steady at 4.3%

WASHINGTON, March 6 (Reuters) - U.S. job growth likely cooled in February, with hiring in the healthcare sector expected to return to normal trends after an outsized increase in January, but the unemployment rate is anticipated to have remained steady at 4.3%.

The Labor Department's closely watched employment report on Friday is likely to project a picture of labor market stability after stumbling ‌in 2025 amid what economists said was uncertainty stemming from President Donald Trump's sweeping tariffs. It would reinforce economists' views that the Federal Reserve was in no rush to resume cutting ‌interest rates, especially as the Middle East war threatens to stoke inflation.

Retail gasoline prices have surged by more than 20 cents per gallon since the U.S. and Israel launched air attacks on Iran last weekend, data from motorist advocacy group AAA showed, potentially leaving consumers ​with less money to spend on other goods and services.

Tehran has retaliated, broadening a war that analysts said was descending into a wider regional conflict. Economists saw a downside risk to the labor market from a prolonged war. The conflict is causing stock market volatility, which economists warned could cause higher-income households, the key drivers of the economy through consumer spending, to cut back.

"We have a job market that is in solid shape, but it's not as good as it was in 2023 and 2024," said Gus Faucher, chief economist at PNC Financial. "The war just creates additional uncertainty, businesses are already cautious, and maybe they become even more cautious. The economy is vulnerable."

Nonfarm payrolls ‌probably increased by 59,000 jobs last month after advancing 130,000 in January, a ⁠Reuters survey of economists predicted. Estimates ranged from a loss of 9,000 jobs to an increase of 125,000 positions. In addition to payback in healthcare, a strike by 31,000 healthcare workers in California and Hawaii could also weigh on payrolls.

Healthcare payrolls increased by 82,000 jobs in January, more than double the monthly average of 33,000 in ⁠2025. Economists attributed the abnormal increase to the birth-and-death model, which the Bureau of Labor Statistics uses to estimate how many jobs were gained or lost because of companies opening or closing in a given month.

The BLS updated the birth-and-death model with January's employment report. Economists estimated that added an extra 70,000 jobs to January's payrolls. Harsh winter weather could also be a drag on payrolls.

"Our projection of slow employment growth is not a signal of an economic slowdown, but ​rather ​it reflects anticipated one-off drags from weather slowing construction payrolls and some payback in healthcare employment," said Michael Gapen, chief ​economist at Morgan Stanley.