US economy loses 92,000 jobs in February, signaling a slowdown

The U.S. labor market took a sharp turn in February as employers shed an estimated 92,000 jobs, according to data released Friday by the Bureau of Labor Statistics. The unexpectedly steep decline in hiring pushed the unemployment rate slightly higher, rising from 4.3% to 4.4%.

Economists had anticipated a more modest slowdown in job growth, projecting a net gain of 60,000 jobs for the month. However, February’s report highlighted vulnerabilities in the labor market, exacerbated by a major health care strike and severe weather conditions.

Health care industry hit hardest

The health care sector, which has been a key driver of job growth over the past year, saw significant losses in February. The industry shed 28,000 jobs, with 31,000 of those losses attributed to a mid-month strike by Kaiser Permanente nurses and other health care workers. Diane Swonk, chief economist at KPMG US, described the labor market as a "one-legged stool" heavily reliant on health care.

"February’s report... showed how precarious the U.S. jobs market is when the supporting ‘one-legged stool’ of health care is kicked out", Swonk said. "The labor market weakness that we had seen emerge last year has not completely abated."

The strike ended on February 23 and is expected to contribute to a rebound in health care employment in March. Still, February’s data underscores the fragility of the economy, which has faced repeated shocks in recent months.

Broader economic pressures

The job losses in February extended beyond the health care sector. Leisure and hospitality dropped 27,000 jobs, while construction employment declined by 11,000. Overall, most industries saw declines, signaling broader challenges in the labor market.

Economists also pointed to external disruptions that are weighing heavily on the economy. A new war in the Middle East has driven gas prices higher, threatening recent progress on inflation. Other developments, such as a major ruling on U.S. trade policy by the Supreme Court and mass layoffs tied to artificial intelligence, have further heightened uncertainty for employers and consumers alike.

"There are enough caveats to the employment weakness to keep the [Federal Reserve] from jumping to the rescue with an interest rate cut next week, but there is also no escaping the fact that the labor market is not as healthy since Trump 2.0 came into office", said Chris Rupkey, chief economist at FwdBonds. "Economic growth can remain solid for a time when jobs growth slows, but it cannot continue to expand indefinitely at a satisfactory pace."

Signs of structural shifts

The February jobs report follows a broader trend of softening in the labor market. The U.S. economy has shed jobs in five of the past nine months, with total job losses since May reaching 19,000. Manufacturing, an industry expected to benefit from the Trump administration's tariffs, has fared particularly poorly, losing jobs in 13 out of the past 14 months, including a 12,000-job decline in February.

Yet, some economists caution against viewing last month’s data as evidence of a full-blown deterioration in the labor market. Nicole Bachaud, an economist at ZipRecruiter, highlighted positive indicators, including stronger-than-expected wage growth. Average hourly earnings rose 0.4% in February, lifting the annual rate to 3.8%, which remains above inflation.

Additionally, the number of people seeking part-time work for economic reasons declined, as did the number of discouraged and marginally attached workers. These signs suggest that, while hiring has slowed, the underlying foundations of the labor market are not entirely eroding.

Weather and revisions add context

Part of February’s job losses can also be attributed to temporary disruptions. A severe cold snap earlier in the month likely weighed on sectors such as construction and leisure and hospitality. Economists also noted that January’s job gains, which initially appeared robust, were revised down to 126,000 jobs from 130,000. December’s employment figures were also adjusted, turning a prior estimate of 48,000 job gains into a 17,000-job loss.

The fluctuating data highlights the challenges of assessing the labor market’s trajectory. As Swonk put it, the economy has gone from being "nearly frozen" last year to "slushy at best" in early 2026.

Future remains uncertain

Uncertainty remains a persistent theme for the U.S. economy. Business confidence has been undermined by inflationary pressures, affordability concerns, and shifting trade policies. Hiring plans, already fragile, have been further disrupted by external shocks, including geopolitical instability and the increasing use of artificial intelligence in the workforce.

While February’s report provides cause for concern, economists emphasize that the labor market is undergoing structural shifts rather than a complete collapse. Demographic changes, including an aging population and lower immigration, mean the U.S. economy requires fewer job additions to sustain itself compared to previous decades. However, without a clearer path forward, uncertainty will likely continue to weigh on businesses and households in the months ahead.

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