WASHINGTON (Reuters) - Layoffs announced by U.S.-employers jumped to levels not seen since the last two recessions amid mass federal government job cuts, canceled contracts and fears of trade wars, offering the clearest sign yet of the toll taken on the labor market by the policies of President Donald Trump's administration.

Global outplacement firm Challenger, Gray & Christmas said on Thursday that planned job cuts vaulted 245% to 172,017 last month, the highest level since July 2020, when the economy was in the grips of the COVID-19 pandemic. It was the highest February total since the Great Recession 16 years ago.

Government accounted for the bulk of layoffs, with Challenger tracking 62,242 announced job cuts by the federal government from 17 different agencies. The government has laid off about 62,530 workers in the first two months of the year, a whopping 41,311% increase compared to the same period in 2024.

"When mass layoffs occur, it often leaves remaining staff feeling uneasy and uncertain," said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. "The likelihood that many more workers leave voluntarily is high."

Tech billionaire Elon Musk's Department of Government Efficiency, or DOGE, is wielding the axe on public spending, an exercise that has resulted in funding freezes, deep spending cuts and the purging of thousands of federal government workers, including scientists and game rangers.

Trump has described the federal government as bloated and wasteful. A federal judge last week temporarily blocked the Trump administration from ordering the Department of Defense and other federal agencies to carry out the mass firings of thousands of recently hired employees.

Federal government contractors have also been caught in the DOGE crossfire, extending the job losses to the private sector. Tariffs already implemented or threatened by the White House also added to companies sending workers home last month.

Challenger said the "DOGE impact" topped reasons for job cuts and was blamed for 63,583 layoffs, linked both directly to the federal workforce and contractors.

Downstream effects of DOGE, like loss of funding to private non-profits, accounted for another 894 announced job cuts. Most of the federal layoffs have been in Washington D.C., which has lost 61,795 jobs so far this year compared to only 60 in 2024.

Outside government, there were job cuts in retail, technology, services and consumer products industries. The federal government layoffs are not expected to show up in February's employment report, which is scheduled for release on Friday, as the purges 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 of economists showed. The unemployment rate is forecast unchanged at 4.0%.