U.S. payrolls fall by 92,000 as unemployment ticks up, signaling a turning point for the labor market

A surprise reversal in hiring

For the first time in years, the U.S. economy shed jobs last month, a jarring turn in a labor market that had been cooling but largely still adding workers.

Employers cut a net 92,000 jobs in February and the unemployment rate edged up to 4.4%, the Labor Department said Friday. Economists had expected payrolls to grow by roughly 50,000 to 60,000, making the report one of the biggest downside surprises in more than a year.

The headline decline was driven partly by strikes that temporarily knocked tens of thousands of health care workers off payrolls. But revisions to prior months and broader sector data suggest a deeper shift: job growth has essentially flatlined since last spring, even as interest rates remain high and global tensions push oil prices above $90 a barrel. The numbers sharpen a dilemma for the Federal Reserve and raise the stakes for President Donald Trump’s economic record heading into the 2026 midterm elections.

“Total nonfarm payroll employment edged down by 92,000 in February,” the Bureau of Labor Statistics said in its monthly Employment Situation report. The agency noted that employment in health care “decreased, reflecting strike activity,” while information and federal government jobs “continued to trend down.”

Where the job losses hit

The report showed broad, if uneven, softness:

• Private employers: down 86,000
• Government: down 6,000

Within government, federal employment declined by 10,000 in February and is now down about 330,000 positions (11%) from its recent peak in October 2024.

Health care, which had been a steady source of new jobs for years, accounted for one of the clearest drags.

• Health care employment: down 28,000
• Offices of physicians: down 37,000 (“primarily due to strike activity”)
• Hospitals: up 12,000

Over the prior 12 months, health care had added an average of 36,000 jobs a month, making it one of the main engines of employment growth.

Many of those positions are likely to reappear once contracts are settled and employees return to work. But economists say the episode highlights how dependent overall job growth has become on a narrow set of industries.

“Once the health care engine shut down — and briefly ran in reverse — there was nothing left to support aggregate job growth,” one mortgage industry research note said this week.

Other sectors also lost ground:

• Information (software, media, telecom): down 11,000
• Leisure and hospitality: down 27,000
• Transportation and warehousing: down 11,300; down about 157,000 since peaking in February 2025
• Construction: down 11,000
• Manufacturing: down 12,000

Wages hold up even as hiring cools

Despite weaker payrolls, wage growth remained solid. Average hourly earnings for all private-sector workers rose 15 cents (0.4%) to $37.32 in February and were up 3.8% from a year earlier. The average workweek was unchanged at 34.3 hours.

Revisions show fading momentum

Revisions to past data underscored how much momentum has faded:

• December: revised from a gain of 48,000 to a loss of 17,000
• January: revised from 130,000 to 126,000

Taken together, the revisions show there were 69,000 fewer jobs at the start of the year than previously thought.

Over the past three months, the economy has added an average of only about 6,000 jobs a month, far below the roughly 50,000 many economists say are needed to keep the unemployment rate from rising, given slower population growth.

Household survey points the same direction

The Labor Department produces the jobs report from two separate surveys: one of businesses, which counts payrolls, and one of households, which measures who is working or looking for work. The household survey painted a similarly downbeat picture.

The number of people reporting they were employed fell by 185,000 in February, while the number saying they were unemployed rose by 203,000 to 7.6 million. The labor force was little changed at 170.5 million, and the labor force participation rate slipped to 62% from 62.1%.

Long-term joblessness continued to creep higher. About 1.9 million people had been out of work for 27 weeks or longer in February, up from 1.5 million a year earlier. They accounted for 25.3% of all unemployed workers.

The pain is not evenly distributed. The unemployment rate for white workers was 3.7% in February. For Black workers it was 7.7%. Teen unemployment stood at 14.9%, and the rate for Hispanic workers was 5.2%.

Population changes complicate the picture

Beginning with January data, the Labor Department incorporated updated population estimates from the Census Bureau. Those adjustments, which reflect slower net immigration and an aging population, reduced estimates of prime-age men in the workforce and increased the share of older adults, who participate in the labor market at lower rates.

Officials said the changes put downward pressure on labor force participation and the share of people employed, without significantly affecting the unemployment rate itself.

Markets react; Fed faces a tougher call

Financial markets, already on edge over a spike in oil prices tied to conflict between the United States and Iran, reacted nervously to the report. Major stock indexes fell around 1% to 2% Friday, as investors weighed the risk that a weakening labor market and higher energy costs could squeeze growth and keep inflation elevated.

Bond yields initially fell on the weak data, which would normally raise expectations for interest rate cuts by the Federal Reserve. But the move was muted compared with past surprises, as traders also factored in the inflation risk from higher oil and the possibility that some of the job losses would reverse once strikes end.

For the Fed, which has held its benchmark interest rate at a roughly two-decade high to bring inflation back toward its 2% target, the report poses a difficult choice. A softer labor market argues for easing borrowing costs sooner to support employment. Persistent price pressures, especially from energy, argue for patience.

In a commentary released after the report, economists at one large regional bank wrote that the labor market “no longer appears to be a major source of inflation pressure,” but they warned that geopolitical shocks were clouding the outlook.

Political fallout in Washington

The numbers quickly reverberated in Washington.

Rep. Brendan Boyle of Pennsylvania, the top Democrat on the House Budget Committee, said the loss of 92,000 jobs showed that “Donald Trump’s economy is failing American families.” In a statement, he argued that “illegal tariff taxes” and tax cuts favoring the wealthy were “squeezing workers and small businesses” and called for policies focused on middle-class households.

Republican lawmakers and administration officials have generally pointed to low unemployment by historical standards and steady wage gains as evidence that the economy remains fundamentally sound. They have argued that strikes, weather and other temporary factors can distort monthly figures and urged looking at longer-term trends.

Those trends, however, are precisely what worry many analysts. Job growth averaged only about 10,000 a month in 2025 after revisions, a dramatic slowdown from the rapid gains earlier in the recovery from the pandemic downturn. Some estimates suggest that, after accounting for those revisions, total payroll employment has been roughly flat since last May.

What to watch next

Whether February proves to be a blip driven by strikes or the start of a more sustained downturn will become clearer in the coming months. Economists will watch closely to see if health care jobs rebound, whether losses in sectors like construction and manufacturing deepen, and how quickly job openings and layoffs shift.

For now, the latest report marks a turning point. An expansion that for years was defined by relentless hiring and worker shortages has given way to a labor market where jobs are harder to come by, gains are narrowly concentrated and more Americans are remaining unemployed for longer stretches, even as those who have jobs continue to see their paychecks grow.