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By Hugh Cameron
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The U.S. lost a significant number of jobs last month, new data from the Department of Labor showed, defying analysts' expectations that some of January's strength would persist.
According to the report released Friday morning by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment fell by 92,000 in February, compared with consensus forecasts of a 59,000 gain. This compares to an increase of 126,000 in January and a loss of 17,000 in December, after job gains were revised down by a total of 69,000 jobs for both months since February's report.
Separately, the agency said the unemployment rate ticked up to 4.4 percent from 4.3 percent, where it had been expected to remain. It was at 4 percent in January 2025 when Donald Trump returned to office.
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Why It Matters
The figures will be seen as a setback for the White House, which has sought to highlight President Trump's economic achievements while allaying fears of a labor market slowdown in the U.S. Last month’s better-than-expected employment report served this purpose, the president hailing January’s initially reported, 130,000-payroll increase as “GREAT JOBS NUMBERS,” and the White House dubbing this proof that the “Trump Economy” was in full swing.
Analysts too said January’s numbers may have signaled a rebound for employment conditions, one commenting that the labor market “may be regaining momentum."
But those commenting on February's reading have said that this dashes any previous optimism while raising new fears about the country's economic trajectory—especially in light of its latest military action in Iran—one calling these a "gut punch" to markets and a "klaxon" for the wider economy.
What To Know
February’s 92,000-job decline is the steepest since the loss of 140,000 in October and, excluding that month, marks the largest drop since late 2020.
According to the BLS, this decline was driven in large part by losses in health care, where payrolls dropped by 28,000. The sector has for months propped up employment figures, with healthy gains offsetting losses across multiple sectors, and has been described as the “engine" of job creation for the U.S.
Other sectors such as information and federal government employment continued on their downward trends, shedding 11,000 and 10,000 jobs, respectively, last month. The loss in government payrolls brings the total reduction since October 2024 to 330,000.
Manufacturing lost an additional 12,000 jobs in February, while transportation and warehousing employment saw a decline of 11,000.
Private payrolls as a whole—previously a point of pride for the Trump administration—came in far weaker than expected, falling by 86,000 versus an anticipated 65,000 increase.
Social assistance was one of the few bright spots in the Labor Department’s otherwise bleak reading, with payrolls increasing by 9,000.
The labor force participation rate, total number of employed people and the number of long-term unemployed changed little in February, though the latter has increased from 1.5 million to 1.9 million over the past 12 months.
What People Are Saying
Ger Doyle, regional president for North America at the workforce solutions firm ManpowerGroup, said in a statement on Friday: "Although February is a short month and numbers often come in lower, today’s report fell significantly short of projections and indicates that employers were far more restrained in their hiring plans as the month began."
James Bentley, director at Financial Markets Online, commented on Friday's figures: “With the [Iran] war already raining blows on the U.S. markets, these bad jobs numbers are a gut punch. It’s early days, but the double-whammy of an oil shock combined with a job shock raises the danger of stagflation in the U.S. economy."
“With downward revisions to both the December and January job numbers, February’s 92,000 drop would be a red warning light at any time. But in the current context it’s a klaxon," he added.
What Happens Next
Analysts have noted that the numbers further complicate the outlook for the Federal Reserve, now grappling with the inflationary impacts of U.S. military action in Iran.
"The Fed now faces a classic crosscurrent: labor market softening argues for caution on holding rates too high, but commodity-driven inflation risk argues against premature easing," according to Daniela Hathorn, senior market analyst at Capital.com.
"In practical terms, this likely reduces the probability of near-term rate cuts while increasing the odds of a more data-dependent stance over the coming months," she wrote in a note on Friday. "If oil prices stabilize and inflation does not reaccelerate meaningfully, this jobs report could mark the beginning of a clearer pivot toward easing."
The BLS is scheduled to release its next employment report, covering March, on Friday, April 3.
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