(Reuters) - U.S. job growth picked up in February and the unemployment rate edged up to 4.1%, but growing uncertainty over trade policy and deep federal government spending cuts could erode the labor market's resilience in the months ahead.

The less-than-expected improvement in job growth brought little relief to investors rattled by tariff-related market turbulence.

Nonfarm payrolls increased by 151,000 jobs last month after rising by a downwardly revised 125,000 in January, the Labor Department's said on Friday. Economists polled by Reuters had forecast payrolls advancing by 160,000 jobs after a previously reported 143,000 gain in January. The rise in the unemployment rate was from 4.0% in January.

MARKET REACTION:

STOCKS: S&P 500 E-minis turned 0.23% lower, pointing to a weak open on Wall Street

BONDS: The yield on benchmark U.S. 10-year notesfell to 4.225%, the two-year note yield fell to 3.908%FOREX: The dollar index extended lower and was off 0.55% and the euro slightly extended a gain to stand up -0.7%

COMMENTS:

BEN MCMILLAN, PRINCIPAL AND CHIEF INVESTMENT OFFICER, IDX INSIGHTS, TAMPA, FLORIDA via text

"It came in pretty much in line across the board. The market will welcome that news. No obvious red flags "under the hood" either. It's good news for equities after yesterday . . . The market is pricing in 3 cuts (which I think is optimistic)...this suggests Fed might lean towards fewer than that."

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

"Not to be a Debbie Downer, but there was a shockingly large jump in the number of people working part time because of economic reasons and a large increase in the number of multiple jobholders. While federal employment fell 10,000, the survey was done prior to the large layoffs, so we are likely to see government serving as a drag on payroll growth. At least the average duration of unemployment has ticked lower, so hopefully those individuals will quickly find gainful employment. 

"The market is back to pricing in three rate cuts in 2025, but I wouldn't bank on the Fed sending any dovish signals anytime soon. With the unemployment rate at 4.1% and inflation still above target, they have no reason to change their messaging yet."

GENNADIY GOLDBERG, HEAD OF US RATES STRATEGY, TD SECURITIES, NEW YORK

    "It's not quite the softening in economic growth that a lot of investors were expecting based on some of the recent data. So, if you look at recent data surprise indicators, they're really plummeting, which fanned expectations of sharply slower economic growth. The payroll number tells a more moderate story. We're looking at a three-month average of about 200K, a six-month average of about 191K. So, overall payroll growth is still relatively okay, even though it's starting to show a little bit of softening at the edges. For the rates market, it remains to be seen if this is weak enough to continue to drive the rally, although there's going to be a lot of caution before Chair Powell's remarks this afternoon."

"The rising unemployment rate to 4.1% is a bit of a rebound, but not really concerning as an outright level. If you look at something like the underemployment rate, that rose to a cycle high. That could be a little bit concerning, but that rate can be quite volatile as well."

(Compiled by the Global Finance & Markets Breaking News team)