What to expect in Friday’s jobs report

(CNN) — Economic uncertainty tied to President Donald Trump’s signature trade policies has led many small businesses to lay off workers, delay expansion plans or scale back production.

ValenSil Technologies, for one, was growing at a pretty good clip heading into 2025.

The Avon, Ohio-based aerosol filler expanded its manufacturing footprint, added a second shift and ramped up its workforce to 47 people, a near-tripling.

At the rate business was humming along, ValenSil was on track to bolt on a third shift, add about eight to 15 more workers, and even purchase land for further expansion.

However, not only were those plans quickly moved to the backburner, but the second shift was cut and the workforce was whittled down – not by layoffs, but via attrition.

Jim O’Connor, ValenSil’s buyer and hiring manager, attributed the production drop-off to the steep tariffs on inputs like aluminum and the heavily unpredictable nature of how they’ve been implemented. High uncertainty had stifled demand among the contract manufacturer’s clients, he said.

“We had quite a slowdown, and we were hoping things would settle out,” he said.

O’Connor firmly believes that the demand is still there, pent-up and percolating, but that clients’ planning and decision-making have been chilled by unpredictable external factors.

ValenSil serves as a microcosm of a broader shift in the US labor market to a low-hire, low-fire environment that is likely to be highlighted when the February jobs report is released Friday morning.

Hopes for any stability and settling out, however, have been quickly shaken. In the past three weeks alone there has been a major trade policy twist courtesy of the US Supreme Court, a mass layoff tied to AI; and, most recently, the biggest wildcard of them all: a new war in the Middle East.

“Those are three very different occurrence and events around the world, but (they’re) boiling down to one word: uncertainty,” Nela Richardson, chief economist at payroll company ADP, told CNN. “This is an uncertain macro and global macro environment, and we’ve seen how that uncertainty affects hiring.”

A look back with a cautious eye on the future

Friday’s jobs report, set to be released by the Bureau of Labor Statistics at 8:30 a.m. ET, will provide a critical snapshot of how the US labor market was faring before the latest shocks to the economic system.

It is widely expected to show that businesses still aren’t hiring as much as they were in recent years — but that they also aren’t laying off workers en masse. In addition to the weakened demand for hiring, there’s also been a shrinking supply of workers (due to long-term demographic shifts as aging Baby Boomers retire and reduced immigration).

Economists expect that US employers added 60,000 jobs last month, which would be a sharp cooldown from January’s estimated 130,000 jobs added. January’s stronger-than-expected total was likely buoyed by some one-time factors (notably, weaker holiday hiring that meant fewer post-holiday layoffs, and unseasonably warm weather in the early part of the month that boosted industries like construction).

The unemployment rate in February is expected to stay at 4.3%, and wage growth should continue to outpace inflation.

ADP’s most recent latest employment report showed an upswing in private-sector hiring (largely in health care) and stable wages for job-stayers. And weekly filings for first-time jobless benefits – considered a proxy for layoffs – have remained steadily low.

That was again the case on Thursday, when the Labor Department reported that an estimated 213,000 initial claims for unemployment insurance were filed during the last week of February. That figure was virtually unchanged from the prior week (which was revised up by 1,000 to 213,000 filings).

Continuing claims benefits, which can serve as an indicator of how long it’s taking unemployed people to find work, butted up against four-year highs for a good portion of last year. They’ve moderated somewhat at the outset of 2026 and totaled 1.868 million during the week that ended February 21, an increase of 46,000, Thursday’s report showed.

Layoff announcements trailed off from January: New data Thursday showed that US-based employers announced 48,307 job cuts last month, a 55% drop from the month before, according to Challenger, Gray & Christmas.

“February’s dip is a nice reprieve from the elevated job cut plans to start the year,” Andy Challenger, chief revenue officer at the outplacement and coaching firm, said in a statement.

That could change, he cautioned.

Technology firms accounted for the biggest share of those announced cuts, at 11,039, of which 4,000 were at payment app company Block, whose CEO Jack Dorsey said that reflected the growing adoption of AI.

“With US involvement in a growing war in Iran, the end of [the first quarter] may bring more layoff plans as companies tighten belts amid uncertainty and higher costs,” he said.

Block’s move heightened concerns about how AI could further upend an already weak labor market; however, there are further dynamics at play, said Andy Challenger, chief revenue officer at Challenger, Gray & Christmas.

“Tech is responding to a number of pressures right now. AI is the big story, but there are also global regulatory concerns, a slowdown in digital advertising driven by tariffs and economic uncertainty, and higher costs to both employ workers and access funding, forcing companies to make difficult decisions,” he said in a statement.

Some data quirks to keep in mind

January jobs reports are typically among the most complex, because they include some post-holiday employment movements as well as a host of annual revisions.

Things are usually a little cleaner come February; however, Friday’s report is expected to include some noteworthy quirks.

First, on the payroll side, the month’s estimated job gains are expected to be distorted due to the roughly 31,000 health care workers on strike during the week that businesses were surveyed for the report. The strike ended on February 23, so the “loss” of jobs will be reversed and reflected as a “gain” in March’s jobs report.

Second, severe winter storms likely put a big damper on hiring in weather-sensitive industries like construction and leisure and hospitality.

Third, February’s report will include some annual revisions that were postponed due to the historic government shutdown this past fall.

Every year, the data generated from the Bureau of Labor Statistics’ survey of households is synced up with fuller estimates from the Census Bureau. These adjustments, referred to as population controls, are likely to show steep downward revisions to both population and labor-force levels – largely reflecting reduced immigration.

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.