February jobs data blew past expectations for the month, the US Bureau of Labor Statistics reporting 275,000 non-farm payroll jobs were added to the US economy against expectations of 200,000. The unemployment rate also moved up from 3.7% to 3.9%

Yahoo Finance Live co-hosts Seana Smith and Brad Smith break down the report, examining labor market trends and how Federal Reserve officials may be expected to respond accordingly to the data.

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Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

SEANA SMITH: And we are getting this right now. 275,000 jobs added to the US economy last month. And the month of February much hotter than what the Street was anticipating, taking a look at that unemployment rate actually ticking higher up to 3.9%.

Average hourly earnings on a month-over-month basis coming in just below what the Street had been forecasting, a rise of about 1/10 of a percent. The year-over-year change in average hourly earnings coming in in line with the Street's expectation, 4.3%, so ticking 2/10 of a percent lower here than what we saw that prior reading. But once again, Brad, another month here where this job spring coming in at much higher elevated levels than what the Street had been forecasting.

BRAD SMITH: Yeah, the job gains really occurring here in health care, government, food services, and drinking places, and social assistance, and transportation, and warehousing there, particularly, as you look through some of the sectors. We're going to have much more of that sector breakdown. That labor force participation number as well that we were keeping close tabs on, the participation rate, 62 and 1/2% for the third consecutive month.

And then the employment to population ratio little changed at about 60.1% here. But I continue to think about the people not in the labor force who currently want a job, 5.7 million. That was little changed here. And that also came up in some of the speeches that we heard from Fed members over the course of this week.

That is a critical area that they're going to continue to keep a close eye on, especially as they continue to monitor the incoming data indicating where inflation is moving, sustainably towards that 2% goal, how much that ties back into the employment situation, and particularly, where people are sensing in this market right now the tightness of the labor market. That's where the Fed has been really keying in on this tightness of the labor market and looking specifically at that labor force participation rate as such.

SEANA SMITH: Yeah. And it's also important to point out here the revisions. So last month, we initially got the 353,000 headline number. That has been revised lower to 229,000. So that is worth pointing out.

The average hourly earnings on a month-over-month basis was revised slightly lower to an increase of 1/2 of a percent. And then that year-over-year change revised lower by 1/10 of a percent to 4.4%. So it's certainly important to point out those revisions as we think about and try to best guess the strength of the labor market here, what exactly that means for Fed policy going forward, and then, of course, the wage fight. The fact that wages are still increasing by the amount that they are clearly just points to the fact that the Fed has a little bit more ways to go in its fight to tame inflation.

BRAD SMITH: Absolutely.