The Labor Department said federal employment dropped by 10,000 in February.

Across the economy, employers added 151,000 jobs, while the unemployment rate ticked up to 4.1%, from 4% in January.

The monthly report from the government is a closely-watched signal of economic health that was under particular scrutiny this month, amid rising concern about the economic disruption sparked by Trump administration policy changes.

Analysts had been forecasting about 170,000 new jobs. The monthly gain in February was similar to the average monthly rise of 168,000 over the past year, the Labor Department said.

Hiring was driven by health care and financial firms. The manufacturing sector also added about 10,000 jobs, gains that were highlighted by the Trump administration.

Government hiring slowed sharply, while analysts cautioned that the report did not yet reflect the full extent of the cuts that the White House has announced.

Seema Shah, chief global strategist at Principal Asset Management, said the report felt “reassuringly in line with expectations, showing payrolls growth only modestly weaker than in recent months”.

“Yet, while the worst fears were not met, the report does confirm that the labour market is cooling,” she warned.

“Furthermore, with no shortage of headwinds confronting the US economy, the softening trend is likely to persist and may potentially deepen given the toxic combination of federal government layoffs, public spending cuts, and tariff uncertainty related inertia.”

Even before Donald Trump took office as president, financial analysts had been surprised at the long-running streak of growth in the US labour market, which came despite pressure from price increases and high interest rates.

In his first weeks, Trump’s changes to US policy have added to pressures on the economy, generating widespread uncertainty.

His changes include tariffs on America’s top three trade partners, some of which have since been reversed, and cuts to federal jobs and spending, efforts that are facing challenges in the courts.

Polls indicate that the moves have the support of his base. But financial analysts have warned that they are contributing to worries in financial markets, hurting consumer sentiment and fuelling weakness across a range of other economic indicators.

A measure of manufacturing showed new orders dropping sharply last month. Retail sales posted their biggest drop in two years in January, while foot traffic at major chains such as Target, Walmart and McDonald’s fell last month, according to data from tracking firm Placer.ai.

Private firm Challenger, Gray & Christmas reported that layoff announcements in February jumped to their highest level since July 2020, driven by government cuts.

But the number of companies warning of job cuts coming in the next few months also jumped, while starting to spread to new sectors, noted Andy Challenger, vice president of the firm.

The Labor Department report “falls squarely in line with big slow cooling of the labour market that we’ve seen for two years- that story of that nice soft landing,” he said.

“My expectation will be that as these get revised in the coming months, we’ll start to see this look worse than it does at first blush.”

Businesses questioned by the Chartered Institute of Personnel and Development (CIPD) also said they would raise their prices to cover increasing employment costs.

Separate research conducted by the Federation of Small Business found that in the final three months of last year confidence among small firms hit its lowest point for 10 years, not including the Covid pandemic.

The Treasury said it was delivering the stability businesses need to invest and grow.

Rises to National Insurance Contributions (NICs) by employers as well as an increase in the National Minimum Wage, announced in October’s Budget, will come into force in April.

According to the CIPD survey, just over a third of the 2,000 firms it spoke to said they planned to reduce their headcount through redundancies or by recruiting fewer workers.

More companies, some 42%, said they would lift prices, while a quarter of those surveyed said “they are cancelling or scaling down plans for investing in or expanding their business”.

The findings come ahead of the latest official employment figures which are due to be published on Tuesday.

Peter Cheese, chief executive of the CIPD, said these were the “most significant downward changes in employer sentiment we’ve seen in the last 10 years, outside of the pandemic”.

“It’s the everyday economy sectors, such as retail and hospitality, which employ large numbers of people, that will be particularly affected by impending increases to employment costs.”

The Federation of Small Business said confidence was falling across a wide range of sectors.

Its small business index, which measures levels of confidence among firms, found small companies “are braced for a contraction in the size of their business in the first three months of 2025”.

These latest warnings join a growing chorus of complaints about the planned increases in NICs and the National Minimum Wage.

Last month, the British Chambers of Commerce (BCC) said a survey of almost 5,000 members suggested that confidence had “slumped” to its lowest level for two years.

In November, a group of the biggest retailers in the UK warned that High Street job losses were “inevitable”, prices would rise and shops would close because of tax rises in the Budget and other rising costs.

However, some have argued that some of these retailers make bumper profits and can afford the tax increase.

Next made over £1bn in profit last year, and is expected to repeat that. In an interview with the BBC, Next’s boss Lord Wolfson accepted that companies like his were the “broad shoulders” that the chancellor insisted must bear the brunt of tax rises needed to rebuild public services.

From April, employers will have to pay National Insurance at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 at the moment.

The government has said the rise is necessary to fund public services and fix a “black hole” in public spending plans. it claims it inherited from the Conservatives.

The Treasury told the BBC it had delivered a “once-in-a-Parliament budget to wipe the slate clean and deliver the stability businesses need to invest and grow, while protecting working people’s payslips from higher taxes, ensuring more than half of employers either see a cut or no change in their National Insurance bills, and delivering a record pay boost for millions of workers”.

Chancellor Rachel Reeves has consistently defended her Budget, acknowledging she had made “difficult decisions” but that they were “the right decisions in the national interest”.

But it has led to a political row, with opposition parties arguing it will dent future economic growth and make companies less likely to hire workers.

The most recent figures from the Office for National Statistics (ONS), estimated that the UK unemployment rate edged up from 4.3% to 4.4% in November.

The latest picture of the jobs market will be revealed on Tuesday. However, the ONS has advised treating its recent figures with “caution”, because of low response rates to its employment survey.

The latest inflation figures – which measure the pace of price rises – are due to be published on Wednesday.

In the 12 months to December, prices rose by 2.5%, a slightly smaller increase than in November, but still above the Bank of England’s target.

If firms do raise prices in the face of increased employment costs, there is a risk it could feed through to further increases in inflation in the coming months.

The Bank has previously warned it expects inflation to spike at 3.7% later this year and take longer to fall back to its 2% target.

However, on Monday, the Bank of England’s governor said inflation was gradually slowing.

Andrew Bailey told business news website BusinessLive: “We still see the gradual disinflation going on. The after-effects of what happened two or three years ago are wearing off, but it is a gradual process.”

Despite the expected rise in inflation later this year, Mr Bailey said it did not appear likely to persist longer term.

In a memo to staff, boss Mark Zuckerberg said he had made the decision to speed up the firm’s regular performance-based cuts in anticipation of an “intense year”.

He said the company would “backfill” the roles later in 2025.

The company, which employs about 72,000 people globally, did not say how the cuts would be distributed around the world.

Workers in the US who are affected will know by 10 February, according to Mr Zuckerberg’s memo. Those outside the US will be informed “later”.

“This is going to be an intense year, and I want to make sure we have the best people on our teams,” he wrote.

“I’ve decided to raise the bar on performance management and move out low performers faster.”

The move comes on the heels of other big decisions by Mr Zuckerberg, including moves to end the company’s fact-checking and diversity programmes.

Performance-based job cuts are common in corporate America. At Meta, they would normally unfold over the course of a year, Mr Zuckerberg said, but the process is being accelerated this year.

Facebook and Instagram get rid of fact checkers

Roughly 3,600 people could be affected this move. They will receive “generous severance”, he said.

The last big cuts at Meta came in 2023, when the company cut about 10,000 positions in a cost-cutting drive after Mr Zuckerberg declared it the “year of efficiency”. It cut about 11,000 roles in 2022.

Mr Zuckerberg also appears to be overhauling his own public image.

On a recent podcast with Joe Rogan, Mr Zuckerberg said he thought companies needed more “masculine energy” and discussed taking up martial arts, which he said he enjoyed because he felt he could more fully express himself, than in his corporate role.

“When you’re running a company, people typically don’t wanna see you being like this ruthless person who’s just like I’m gonna crush the people I’m competing with,” he said. “But when you’re fighting, it’s like no.”

“I think in some ways when people see me competing in the sport they’re like oh no, ‘That’s the real Mark.”