WASHINGTON (Reuters) -U.S. job growth picked up in February, but cracks are emerging in the once-resilient labor market amid a chaotic trade policy and deep federal government spending cuts that threaten to disrupt economic growth this year.

The Labor Department’s closely watched employment report on Friday, the first under President Donald Trump’s watch, showed a broader measure of unemployment surging to near a 3-1/2-year high last month as the ranks of part-time workers swelled.

The share of workers holding multiple jobs was the highest since the Great Recession. Economists said the Trump administration’s whiplash trade policy was making it difficult for businesses to plan ahead.

Business sentiment has plunged since January, erasing all the gains notched in the aftermath of Trump’s election victory in November. The stock market has sold off.

“The winds in the labor market are shifting,” said Bernard Baumohl, chief global economist at the Economic Outlook Group.

Nonfarm payrolls increased by 151,000 jobs last month after rising by a downwardly revised 125,000 in January, the Labor Department’s Bureau of Labor Statistics said.

Economists polled by Reuters had forecast payrolls advancing by 160,000 jobs after a previously reported 143,000 gain in January. The survey of establishments showed job growth averaged 138,000 per month so far this year compared to 209,000 in the fourth quarter.

“This points to a rapid cooling in the labor market and economic growth in the first quarter, but no real impending recession signals yet either,” said Scott Anderson, chief U.S. economist at BMO Capital Markets.

SYDNEY (Reuters) – Australian household spending rose for a fourth straight month in January, driven by a rise in services, although the annual pace of growth slowed, data showed on Friday.

The Australian Bureau of Statistics’ monthly household spending indicator (MHSI) showed a seasonally adjusted rise of 0.4% in January from December, when it rose by 0.2%.

Annual growth, however, slowed to 2.9% from 4.2% in the previous month.

Robert Ewing, ABS head of business statistics, said consumers reduced spending on goods, having already taken advantage of promotional events such as Black Friday sales at the end of last year.

“A 1.5% rise for services drove the January growth. This came as households spent more on health services, air travel, and sports and physical recreation services,” Ewing said.

The MHSI series will replace the current retail sales report from July and is much broader in scope covering 68% of household consumption, more than double the retail survey.

It includes spending on many services and should offer a better guide on what to expect from household consumption in the gross domestic product (GDP) report.

WASHINGTON, March 6 (Reuters) – The number of Americans filing new applications for unemployment benefits fell more than expected last week, suggesting that the labor market remained stable in February, though turbulence lies ahead from tariffs on imports and deep government spending cuts.

That was flagged by other data on Thursday showing layoffs announced by U.S.-based employers jumped in February to levels not seen since the last two recessions amid mass federal government job cuts, canceled contracts and fears of trade wars.

A separate unemployment compensation for federal employees (UCFE) program, which is reported with a one-week lag, showed applications rising to a four-year high of 1,634 from only 614 during the week ending February 15.

Tech billionaire Elon Musk’s Department of Government Efficiency, or DOGE, has fired probationary federal government workers. President Donald Trump has described the federal government as bloated and wasteful.

Global outplacement firm Challenger, Gray & Christmas said it had tracked 62,242 announced job cuts by the federal government from 17 different agencies in February. Most of the layoffs have been in Washington D.C., which has lost 61,795 jobs so far this year compared to only 60 in 2024.

Contractors have also been caught in the DOGE crossfire, extending the job losses to the private sector.

Challenger said the “DOGE impact” was blamed for 63,583 of the announced 172,017 layoffs last month.

For now, the overall labor market continues to plod along.

The Federal Reserve’s “Beige Book” report on Wednesday described employment as having “nudged slightly higher on balance” since mid-January. Labor market stability is critical to the U.S. central bank’s ability to keep interest rates unchanged while policymakers monitor the economic impact of tariffs and an immigration crackdown.

The Fed left its benchmark overnight interest rate unchanged in the 4.25%-4.50% range in January, having reduced it by 100 basis points since September, when it embarked on its policy easing cycle. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, advanced 42,000 to a seasonally adjusted 1.897 million during the week ending February 22, the claims report showed.

Stocks on Wall Street traded lower. The dollar slipped against a basket of currencies. U.S. Treasury yields rose.

RECORD HIGH TRADE DEFICIT

The federal government layoffs are not expected to show up in February’s employment report, due on Friday, as the layoffs happened outside the survey week.

But the hiring and funding freezes could have an impact on government and contractor employment.

Nonfarm payrolls likely increased by 160,000 jobs after rising 143,000 in January, a Reuters survey showed. The unemployment rate is forecast unchanged at 4.0%.

A third report from the Commerce Department’s Bureau of Economic Analysis showed the trade deficit widened 34.0% to an all-time high of $131.4 billion in January as businesses rushed to bring in merchandise ahead of import duties.

The percentage change was the largest since March 2015 and put trade on track to subtract from gross domestic product in the first quarter. Trump this week slapped a new 25% tariff on imports from Mexico and Canada and doubled duties on Chinese goods to 20%, triggering a trade war.

The goods trade deficit with Canada hit a record high in January. The gap widened further with China and rose slightly with Mexico. On Thursday, Trump said Mexico won’t be required to pay tariffs on any goods that fall under the United States-Mexico-Canada Agreement on trade until April 2, as the administration’s trade policy continues to evolve.

Imports soared 10.0%, the most since July 2020, to $401.2 billion. Goods imports increased a record 12.3% to an all-time high of $329.5 billion.

They were driven by a $23.1 billion increase in imports of industrial supplies and materials, mostly reflecting finished metal shapes, probably gold.

There were large increases in consumer goods imports like pharmaceutical preparations, cell phones and other household goods. Imports of capital goods including computers, computer accessories and telecommunications equipment also rose. Imports of services climbed $0.4 billion to $71.7 billion.

Exports rose 1.2% to $269.8 billion. Goods exports increased 1.6% to $172.8 billion, boosted by capital goods like civilian aircraft and engines as well as semiconductors and computers. Consumer goods also rose, driven by pharmaceutical preparations and jewelry. But exports of other goods dropped $1.3 billion.

Food exports fell $1.0 billion amid a decline in soybeans. Exports of services increased $0.6 billion to $97.0 billion.

The inflation-adjusted goods trade deficit shot up 27.5% to a record $142.9 billion. This deterioration and decline in consumer spending in January have raised the risk of a contraction in GDP in the first quarter.

But some economists still expect moderate growth, arguing that gold accounted for much of the surge in imports.

Mining.com reported in January traders in London were rushing to ship gold to the U.S. to avoid tariff risks and capture premium prices. Gold imports, not intended for official reserve purposes, are excluded from national accounts.

The Atlanta Federal Reserve is currently forecasting GDP declining at a 2.8% annualized rate this quarter. The economy grew at a 2.3% rate in the October-December quarter.

“Trade will very likely stay in the spotlight this year,” said Oren Klachkin, financial markets economist at Nationwide.

WASHINGTON, March 6 (Reuters) – The U.S. trade deficit widened to a record high in January amid front-loading of imports ahead of tariffs, suggesting that trade could be a drag on economic growth in the first quarter.

The trade gap surged 34.0% to an all-time high of $131.4 billion from a revised $98.1 billion in December, the Commerce Department’s Bureau of Economic Analysis (BEA) said on Thursday. The percentage change was the largest since March 2015.

Private sector job creation slowed to a crawl in February, fueling concerns of an economic slowdown, payrolls processing firm ADP reported Wednesday.

Companies added just 77,000 new workers for the month, well off the upwardly revised 186,000 in January and below the 148,000 Dow Jones consensus estimate, according to seasonally adjusted figures from ADP.

The total was the smallest increase since July and comes at a time when worries are rising that economic growth is slowing and worries brew that President Donald Trump’s tariff plans will spark another round of inflation. ADP said annual pay rose 4.7% in February, the same as the prior month.

Stock market futures lost some of their gains following the release while Treasury yields were mixed.

“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” said ADP’s chief economist, Nela Richardson. “Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”

Though most economic data points remain positive, sentiment indicators have shown rising fears among both business executives and consumers that the Trump tariffs could raise prices and slow growth. In the extreme scenario, the combination could cause stagflation, a condition of flat or negative growth and rising prices.

The ADP report reflected some of those concerns, as a sector that lumps together trade, transportation and utility jobs saw a loss of 33,000 positions. Education and health services reported a decline of 28,000, while information services decreased by 14,000 at a time of uncertainty for artificial intelligence-related companies, despite Trump’s commitment to advancing AI efforts.

On the positive side, leisure and hospitality jobs jumped by 41,000, while professional and business services added 27,000, and financial activities and construction both saw gains of 26,000. Manufacturing also reported an increase of 18,000, countering the ISM manufacturing survey for the month that indicated companies were pulling back on hiring.

Services and goods-producing were in unusual balance for the month, adding 36,000 and 42,000 respectively on the month. As the U.S. is a services-based economy, that side usually dominates in job creation.

Employment growth tilted toward large firms in February, with companies employing 500 or more workers reporting a gain of 37,000 while those with fewer than 50 employees saw a loss of 12,000.

The ADP count serves as a precursor to the Labor Department’s Bureau of Labor Statistics report on nonfarm payrolls, due Friday. However, the two reports can differ substantially due to different methodologies. In January, the BLS reported an increase of just 111,000 in private payrolls, well below the ADP count.

Economists surveyed by Dow Jones expect Friday’s report to show job gains of 170,000 and an unemployment rate steady at 4%.

In continuing coverage on the Canada, Mexico, and China tariffs imposed by President Donald Trump, News 8 spoke to a financial expert for the impacts not only occurring on Wall Street, but also the potential changes to your day-to-day expenses.

The stock market took a significant tumble Tuesday morning, hours after the tariffs took effect.

“There always has to be patience when it comes to investing. What’s really hard about this timeline is we have some dates and ideas, but is this a negotiation tactic? Will these go in place? If and when they do – how long will they be in place for? Will we see the percentage of tariffs into the future if we don’t see results?” said Ethan Wade, chief development officer for Brighton Securities.

Wade also spoke on the ripple effects the tariffs will have not only on investors, but for the average consumer.

“These tariffs ultimately mean our auto prices will likely go up. Our produce prices will likely go up – your strawberries, bananas, avocados – you’re very likely to see price increases there. Our energy prices are going to go up – and for Americans who have already, for a number of years, have been struggling at the supermarket… the idea that we may have to struggle a little bit more and that things may get even harder than they’ve been is incredibly unsettling,” said Wade.

While the exact timeline of the tariffs are loose, Wade gives advice on the uncertainty surrounding the future impacts on Americans.

“While we have a loose timeline, there still exists a significant amount of uncertainty and when you have that amount of uncertainty, you have to have patience, and we don’t want to react. It’s always best to be proactive rather than reactive,” said Wade, “It’s when we don’t know [and when the average citizen] can’t get an idea of the impact of this. We always think worst case scenario and often, we think it isn’t as bad as it seems, and it also is as good as it seems, there’s usually some middle ground there”.

When it comes to energy bills, News 8 reached out to the New York ISO, the team dedicated to overseeing the state’s grids. A spokesperson said in part, “The U.S. and Canada have one of the most integrated electric grids in the world, allowing system operators in both countries to pool resources for improved reliability and economic efficiency.” The spokesperson added, “The NYISO anticipates having adequate supplies to meet expected demand on the system”.

President Donald Trump will “probably” announce tariff compromise deals with Canada and Mexico soon, Commerce Secretary Howard Lutnick said Tuesday.

The potential agreements would likely involve scaling back at least part of Trump’s brand new 25% tariffs on imports from Mexico and Canada, he added.

Lutnick’s comments came minutes after the U.S. stock market limped to a close for a second day of sharp declines, spurred at least in part by investors’ fears that Trump’s aggressive policies will ignite a crippling trade war.

After his remarks, U.S. stock futures tied to all three major averages rose.

The compromises with Canada and Mexico will likely be revealed as soon as Wednesday, Lutnick said on “Fox Business.”

While the Cabinet secretary did not specify what Trump would agree to, he suggested the U.S. president would be willing to meet Canada and Mexico “in the middle.” He also appeared to foreclose on the possibility that Trump would lift the tariffs entirely.

The Trump administration on Tuesday reimposed sweeping 25% tariffs on Canadian and Mexican imports after putting them on pause for a month.

Trump, who has held up tariffs as an all-powerful negotiating tool, based the policy on allegations that the neighboring countries were failing to stem the flow of drugs and crime into the U.S.

“Both the Mexicans and the Canadians are on the phone with me all day today, trying to show that they’ll do better,” Lutnick said Tuesday afternoon.

“And the President is listening because, you know, he’s very, very fair and very reasonable. So I think he’s going to work something out with them,” he said.

Lutnick described a deal in which Canada and Mexico agree to “do more,” at which point Trump would “meet you in the middle some way.”

“We’re going to probably be announcing that tomorrow,” he said.

Lutnick said the announcement would not be another pause.

The comments came hours before Trump was set to deliver a primetime address to a joint session of Congress.

Data out Monday showed activity in the manufacturing sector slowed in February while costs increased and employment contracted, as President Donald Trump’s tariff policies weighed on the sector.

The Institute for Supply Management’s manufacturing PMI registered a reading of 50.3 in February, down from January’s 50.9 reading and below the 50.7 economists had expected. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate a contraction.

Meanwhile, the prices paid index surged to a reading of 62.4, up from 54.9 the month prior and its highest level since July 2022, reflecting company costs continuing to increase. The employment index fell into contraction with a reading of 47.6 in February, down from 50.3 in January.

All three major stock indexes hit their lows of the day following the release, with the Nasdaq Composite (^IXIC) sliding the furthest, down about 1% before paring back losses.

“Demand eased, production stabilized, and destaffing continued as panelists’ companies experience the first operational shock of the new administration’s tariff policy,” Institute for Supply Management Chair Timothy Fiore wrote in the release. “Prices growth accelerated due to tariffs, causing new order placement backlogs, supplier delivery stoppages and manufacturing inventory impacts.”

Fiore explained in an interview with Yahoo Finance that the surge in the prices paid index was largely due to Trump’s 25% tariffs on steel and aluminum imports.

“The whole story here is really around the tariff issue,” Fiore said, further explaining that the increases in prices lead to lower new orders from businesses and also could impact hiring plans. If Trump’s proposed 25% tariffs on Mexico and Canada are enacted, Fiore said he expects the situation to worsen, with prices continuing to increase and manufacturing activity further weakening.

“If you stay on the path that we’re headed on, I think it’s going to be tough, a tough route [for the US economy],” Fiore said.

ISM’s prices paid index has closely tracked the monthly prints of the Consumer Price Index (CPI) and the Producer Price Index (PPI), per Fiore. This month’s large increase in the prices paid index likely points to an increase in prices for the two inflation measures — CPI and PPI — in February, Fiore said.

Capital Economics North America economist Thomas Ryan wrote in a note to clients on Monday that the ISM data “supports our view that there will be a goods-driven resurgence in core inflation in the second half of the year.”

“The drop back in the ISM manufacturing index and the negative tone of the report will add to fears that the economy has taken a sudden turn for the worse amid the barrage of weaker activity data in recent weeks,” Ryan wrote.

Canada, Mexico and China have vowed to retaliate after tariffs on goods entering the US from their countries came into effect on Tuesday.

US President Donald Trump has imposed 25% tariffs against Canada and Mexico, and 20% tariffs against China.

Stock markets in the US, UK and Asia dipped following the introduction of the taxes amid fears of trade war widening.

Analysts have warned tariffs could push up prices for US households and could also have a knock on effect on consumers across the world, including the UK.

Trump threatened to impose the tariffs, which are a tax added to a product when it enters a country – on Canada, Mexico and China in response to what claims is the unacceptable flow of illegal drugs and illegal immigrants into the US.

But Canadian Prime Minister Justin Trudeau said his country was responsible for less than 1% of fentanyl entering the US and would retaliate with 25% tariffs on $150bn worth of US goods.

China swiftly announced its own counter measures, which include 10-15% tariffs on some US agricultural goods, including wheat, corn, beef and soybeans. Mexico is expected to announce its response later.

The three major stock market indexes in the US sank following the news, while the FTSE 100 index of the UK’s biggest publicly-listed companies opened sharply lower on Tuesday and stock markets in Asia were also down.

Andrew Wilson, from the International Chamber of Commerce, said: “What we’re seeing is the biggest effective increase in US tariffs since the 1940s – with severe economic risks attached to that.”

“The initial market moves are entirely reflective that we’re now entering into a very risky scenario for global trade and for the global economy,” he told BBC Radio 4’s Today programme

He said Yale University had predicted these measures could cost US households in the region of $2,000 in this year alone.

Ella Hoxha, head of fixed income at Newton Investment Management, told the BBC: “In terms of consumers, you’re more likely looking at, certainly over the short term, increases in prices as companies pass some of those prices onto the consumer.”

Chris Torrens, vice president of the British Chamber of Commerce in China, added: “It’s a huge challenge for British business because of the historical links that the UK and the US have. [We are] Seeing what looks like the dismantling of a transatlantic alliance between the US and Europe.

“But, there is a real sense of hope for a stronger UK-China relationship.”