(fxcue news) - Employment in the U.S. increased by slightly less than expected in the month of February, according to a closely watched report released by the Labor Department on Friday. The report said non-farm payroll employment climbed by 151,000 jobs in February after rising by a downwardly revised 125,000 jobs in January. Economists had expected employment to grow by 160,000 jobs compared to the addition of 143,000 jobs originally reported for the previous month. The Labor Department said jobs gains in the healthcare, financial activities, transportation and warehousing and social assistance sectors was partly offset by a decrease by federal government employment. "Federal government employment declined by 10,000 over the month, a number that's likely to increase in future months, given the announced plans for reductions in force," said Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni. The report also said the unemployment crept up to 4.1 percent in February from 4.1 percent in January, while economists had expected the unemployment rate to remain unchanged. The unexpected uptick by the unemployment rate came as the household survey measure of employment plunged by 588,000 persons, while the labor force shrank by 385,000 persons. "These data came in quite close to market expectations and hence should not result in much change concerning Fed policy," said Fratantoni. He added, "MBA anticipates that the Fed will keep their target rate steady through the next quarter but will likely cut one more time this year as inflation moves slowly to target and the job market softens." The Labor Department also said average hourly employee earnings increased by 10 cents, or 0.3 percent, to $35.93 in February. The annual rate of average hourly employee earnings growth crept up to 4.0 percent in February from a downwardly revised 3.9 percent in January. Economists had expected the annual rate of average hourly employee earnings growth to come in unchanged compared to the 4.1 percent originally reported for the previous month.