The US Bureau of Labor Statistics revealed that 275,000 jobs were added to the US economy in February. In that time, the national unemployment rate moved higher to 3.9%, its highest level in over two years.

Yahoo Finance Markets Reporter Josh Schafer explains Friday morning's report, illustrating what this unemployment figure could mean in a softening inflationary environment.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

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

Video Transcript

BRAD SMITH: Good morning, everyone. Getting to our top story of the day, the February jobs report. Nonfarm payrolls coming in hotter than expected, 275,000 jobs added versus the 200,000 that were anticipated. "Yahoo Finance's" Josh Schafer joins us at the desk with more. Hey, Josh.

JOSH SCHAFER: Yeah, Brad. It seems like the big takeaway here is really to look past that headline beat that you saw on the nonfarm number, and hone in on some of the other numbers you're seeing here, specifically, the revisions we saw to last month.

Remember, we initially had 353,000 jobs added in January. That got revised down by more than 100,000 gains. So when you zoom out and look at the broader picture, the labor market not really running as hot as some people thought. I thought Andrew Hunter over at Capital Economics explained the report well and some saying, there's less reason now to be concerned about renewed labor market strength that will drive inflation higher.

You have wage growth coming in a little bit lower than had been expected on a month-to-month basis. Again, you take a look at that nonfarm number. And then, guys, the unemployment rate at 3.9% is the highest level we've seen in the last two years. That is now back up to a level that is something we haven't been seeing on a consistent basis. First time it's come up in four months.

So I think, overall, if there was any concern that the labor market was getting too hot again, it seems like this report, at least, settles that for now.

SEANA SMITH: Josh, do you think that-- the market, obviously, taking this, at least, initially, as good news here, given the mixed spring, given the fact that once you dig into this report, some of those very key figures were softer than what the Street had, maybe, been anticipating. Is this report then exactly what the market wants to see at this point?

JOSH SCHAFER: It seems like if you want a Fed rate cut in May or June, this is your report. That was what Neil Dutta over at Renaissance Macro said. He called it one for the doves. And in that sense, essentially, saying that if you want a cut to come in May or June, remember, part of that base case is, at least, some level of softening in the economy.

We can't sit at a 3.7% unemployment rate, have people keep making more money, and people keep getting more jobs, and not be worried about inflation. So I think if you zoom out, the soft landing narrative always had a little bit of weakness coming in the labor market.

So seeing a little bit of weakness doesn't mean we should panic. But it is helpful if you're looking for a Fed rate cut to come sooner rather than later.