The U.S. lost 92,000 jobs in February, a sign that the job market continues to struggle across a broad range of sectors.
The hiring numbers, reported Friday by the Labor Department, fell far short of January’s gain of 126,000 jobs. They were worse than the gain of 50,000 jobs that economists polled by The Wall Street Journal had expected to see.
The unemployment rate ticked slightly higher to 4.4%. While that is still low, the Friday report exposes a troubling weakness in a labor market that has shown very little employment growth in recent months.
“It’s not pretty,” said Gregory Daco, chief economist at EY-Parthenon.
Daco had expected a weaker report than most economists, forecasting a loss of 15,000 jobs as payback for a strong January report. But not only was the February job decline steeper than he had expected, but there were also downward revisions to December and January that lowered the U.S. job count by an additional 69,000.
He worries that a lackluster labor market threatens consumer spending, which is the main driver of the entire economy.
“Especially after adjusting for inflation, income growth is under pressure, and therefore people’s ability to spend is constrained,” he said.
The U.S. has now lost jobs in three of the past six months.
The numbers raise expectations that the Federal Reserve will have to cut rates.
For the Fed, a labor market stumble comes at an uncomfortable moment because policymakers are already contending with new potential disruptions to energy and commodity prices following the U.S.-Israel military campaign in Iran that has closed key global shipping lanes. Those disruptions raise the prospect of another bout of price increases in an economy where inflation has been above the Fed’s 2% goal for five years.
A central bank that simultaneously watches the job market weaken, and inflation risks re-emerge, has few good options.
While the Fed is expected to hold rates steady at its meeting later this month, the February employment report will revive questions about whether last year’s three rate cuts were sufficient to protect the labor market. If the unemployment rate continues to rise in the coming months, that could suggest the labor market is weaker than expected and put pressure on Fed officials to resume rate reductions around midyear.
U.S. Treasury yields fell after the report, reflecting the increased expectations that the Fed will have to lower rates.
U.S. stocks were in the red. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq composite were all down 1% or more in early trading.
January’s gain had been driven by an unusual surge in healthcare hiring that seemed unlikely to repeat. Moreover, a large healthcare workers’ strike occurred during the period that the Labor Department’s Bureau of Labor Statistics surveyed employers for February, further weighing on the jobs count.
Friday’s report also incorporated an annual update to population figures underlying the unemployment rate and other measures. These showed the population was lower in December than previously reported, reflecting the sharp drop in the flow of immigrants into the U.S. since President Trump returned to office.
These revisions don’t have any bearing on the Labor Department’s main jobs count, which is based on a survey of employers.
These now show that there were 1.4 million fewer people employed as of December than previously reported. These new estimates are reflected in the Labor Department’s January and February data, but prior data don’t get revised.
That downward revision to employment doesn’t necessarily reflect a deterioration in the labor market. Rather, it is a reflection of changes in immigration that weren’t anticipated when earlier population estimates were drawn up. President Joe Biden tightened immigration in mid 2024, and restrictions have become far more severe under Trump. Each year, the Labor Department updates its population figures based on Census Bureau figures.
February’s job losses were widespread.
Healthcare and social assistance, which has been the primary engine of job growth for much of the past two years, shed 18,600 jobs in February. That marked a sharp pullback from January, when the sector added 116,400 positions. A strike by 31,000 workers at Kaiser Permanente weighed on the number of healthcare workers. That strike concluded late last month.
Construction lost 11,000 jobs. The sector had been bolstering employment in recent months, driven by the growing demand for new data centers.
Leisure and hospitality, which employs roughly one in 10 American workers, lost 27,000 jobs. Manufacturing lost 12,000 jobs. Federal-government employment fell by 10,000.
The labor market slowed markedly last year, with the U.S. adding the fewest jobs outside of a recession since 2003. That was in part due to the Trump administration’s cuts to the federal workforce through a combination of layoffs and voluntary buyouts, but it also reflected the cautious approach to hiring that many businesses adopted to combat uncertainty about tariffs and other policy measures. Expectations that artificial intelligence could reduce staffing needs might have further cut into hiring plans.
Despite some high-profile announcements, the overall level of layoffs remains low. But businesses are limiting the number of new workers they take on. Moreover, job growth was highly uneven, with the healthcare and social-assistance sectors driving gains over the past year, and most other sectors shedding jobs.
The job slowdown, alongside persistent cost-of-living concerns, has eaten into Americans’ confidence. In its most recent survey of consumers, the University of Michigan found that 58% of respondents expected unemployment to rise over the next year.
Even so, while the unemployment rate has drifted higher over the past year, it remains low by historical standards. And economists are hopeful that job growth will be better this year, particularly as tax cuts flow into the economy—though the Iran war, and the gasoline-price increases it has brought on, add a new wrinkle.
Seasonal adjustment and healthcare strike back... After an unexpected January surge driven by healthcare payrolls failing to show their usual seasonal dip, payrolls fell sharply in February amid a healthcare strike. With healthcare the primary source of net job gains, payroll growth is likely to remain volatile. As the payroll rollercoaster persists, the unemployment rate has become the key indicator of labor market health. The unemployment rate points to a mild slowdown in the labor market from January to February.
1. Payrolls
February nonfarm payrolls fell by 92K, far below expectations. December payrolls were revised from gains to a loss of 17K, and January gains were revised down slightly to 126K. The sharp slowdown in payroll growth reflects a drop in healthcare employment, which has accounted for nearly all job gains since January 2025. The losses were concentrated in physician offices and were driven in part by the February nurse strike. Outside healthcare, payroll growth remains weak, as it has over the past year.
2. Unemployment
Unemployment ticked up to 4.4% from 4.3%, following household population revisions from January 2026 onward. The rise reflects more reentrants and temporary job losses. Part‑time work for economic reasons declined from January to February. Household survey data show employment fell by 185K from January to February. Population control updates had a minimal effect on the unemployment rate, according to the BLS.
3. Labor Supply & Earnings
For prime-age workers (25–54), labor force participation and the employment-to-population ratio were effectively unchanged from January to February and remain near record highs for the last quarter century. Wage growth was unchanged: average hourly earnings rose at a 5.0% annualized pace in January (3.4% for production and nonsupervisory workers), on par with 5.0% (4.2%) in January. Wage‑driven inflation pressure remains unconcerning given that the job switching and the job switching earnings premium is near the lowest we have seen this decade.
4. Early Warning Signals
Temporary help employment fell by 7K after appearing to steady in January. Youth unemployment rates (ages 16–19 and 20–24) increased from January to February, though they appear lower on net due to population adjustments. Unemployment among Black workers also rose, driven by an increase among Black women. Taken together, these indicators continue to point to ongoing cooling in the labor market, consistent with LinkedIn’s February data.
5. Technical Notes
Today’s household survey data (including the unemployment rate) reflect updated population controls. Because these controls are applied only to the current year, they limit comparability of household statistics across years, particularly for level measures such as employment counts rather than ratios like the unemployment rate.
Some months confirm what many households are already feeling. This was one of them.
February’s employment report missed the mark across the board. Payrolls declined by 92,000 jobs, and the unemployment rate edged up to 4.4%. Downward revisions to December and January erased another 69,000 jobs, adding further insult to injury. Labor force participation slipped to 62%, a troubling sign that some workers may be growing discouraged amid the softening we have seen over the past year.
Since last June, the job market has followed an uneven rhythm: one month of job gains, followed by one month of contraction. The Labor Department now shows payrolls down 17,000 in December, up 126,000 in January, and down again in February. That pattern speaks to instability rather than steady progress.
Sector details add context. A strike by medical workers weighed on health care hiring. Social assistance, previously a reliable source of job growth, added 9,000 positions. Meanwhile, warehousing and transportation, information, and the federal government posted declines.
Importantly, February’s survey period preceded the outbreak of war with Iran. With that conflict now underway, the economy faces what could amount to a geopolitical tax in the form of higher financing costs, crude oil, jet fuel, gasoline, and mortgage rates. That comes on top of existing tariffs. The U.S. economy has been resilient, but resilience is far from guaranteed in an uncertain policy and geopolitical environment.
For households, a softer job market could make it increasingly difficult to switch jobs, negotiate pay, or feel secure about taking on new debt. For policymakers, this likely keeps the Federal Reserve on hold as it waits for greater clarity.
How are you seeing conditions evolve in your workplace or industry – or your own job search? I welcome your perspective in the comments.