Early: Our February 2025 Unemployment Forecast
The February 2025 Employment Situation report from the Bureau of Labor Statistics (BLS) showed a total nonfarm payroll employment increase of 151,000 jobs and a stable unemployment rate of 4.1%. However, our forecast, as published on Impact Investing Online, still anticipates a worsening employment situation by March 2025. Below, we note how our early projection remains valid despite the Feb. BLS data.
Survey Timing and Lagging Indicators
The BLS employment survey captures data up to February 15, 2025. This means that recent economic developments, corporate layoffs, and market slowdowns that occurred in the latter half of February are not reflected in the reported numbers. Our forecast accounts for these expected deteriorations, which have yet to fully materialize in official statistics but are likely to be evident in the March report.
Sectoral Employment Trends and Declining Federal Employment
The February report shows job gains in health care, financial activities, transportation and warehousing, and social assistance. However, the federal government recorded employment declines, signaling potential fiscal tightening that could ripple into broader economic sectors. If this contraction continues, government-dependent industries, contractors, and adjacent sectors may see job losses accelerating into March.
Unemployment Rate Comparison: Forecast vs. Actual
While the overall unemployment rate reported in February was 4.1%, our forecast was, at 4.2%, close. We continue to anticipate significant shifts between demographic groups. Black unemployment is expected to rise by March, reflecting deeper labor market disruptions. For February. 2025, 139,000 more Black people were employed than we forecast. Note that White unemployment in February was 112,000 higher that our forecast. We forecast 50,000 more Hispanic workers unemployed. The actual number of Asian unemployed was 81,000 lower than we forecast.
Indicators of Future Employment Contractions
Corporate Layoffs: Several major firms have announced restructuring plans and layoffs in late February, which will manifest in the March BLS report.
Consumer Demand Slowdown: Declining consumer confidence suggests reduced spending, leading to job reductions in retail, hospitality, and manufacturing.
Interest Rate Pressures: The Federal Reserve’s monetary policy remains restrictive, causing continued strain on businesses, particularly in sectors sensitive to borrowing costs.
Conclusion
Our forecast for March 2025 anticipates a rise in unemployment, particularly for White and Black workers, despite the February report showing relatively stable numbers. The lag in survey timing, combined with emerging economic pressures, suggests that employment conditions will deteriorate in the coming weeks. While the February data may give an impression of stability, forward-looking indicators signal a sharper labor market slowdown by March, aligning with our forecasted unemployment trends.