The US economy lost jobs in February for the third time in five months, with nonfarm payrolls falling by 92,000. That was significantly worse than the forecast of 50,000 and well below January’s downwardly revised total of 126,000. The unemployment rate edged up to 4.4%. Labor force participation dropped to 62%, its lowest level since December 2021.
What Drove the Losses
Several factors combined to weaken the February numbers. A strike at Kaiser Permanente sidelined more than 30,000 workers in Hawaii and California, costing healthcare 28,000 jobs. That sector had been the primary growth driver in payrolls for at least the past year. Construction lost 11,000 jobs after a strong January, partly due to severe winter weather. Manufacturing shed 12,000 positions despite tariffs aimed at bringing jobs back to the US. Information services lost 11,000 jobs, continuing a 12-month trend tied to AI-related cuts averaging 5,000 per month. Federal government employment fell by 10,000, part of a broader slide of 330,000 federal jobs, or 11% of the total workforce, since October 2024.
Transportation and warehousing also declined by 11,000. Social assistance was one of the few bright spots, adding 9,000 jobs.
Wages Rose But Long-Term Unemployment Surged
Despite the weak headline number, wages grew more than expected. Average hourly earnings rose 0.4% for the month and 3.8% from a year ago, both slightly above forecast. However, long-term unemployment also worsened. The average duration of unemployment reached 25.7 weeks, the longest since December 2021.
What the Fed and Economists Are Saying
Federal Reserve Bank of San Francisco President Mary Daly told CNBC the report raises questions about whether the labor market was stabilizing as hoped. She noted that inflation is still running above target and oil prices are rising. Most Fed officials have taken a wait-and-see approach. However, following Friday’s report, traders pulled forward their expectations for the next rate cut to July and priced in a greater chance of two cuts before year end.
Jefferies economist Thomas Simons called it a perfect storm of temporary drags and said the underlying picture is still poor even when adjusting for weather and the strike. He added that the risk of a downturn has certainly increased. White House economic adviser Kevin Hassett argued the numbers are consistent with the administration’s expectations given reduced immigration, saying break-even employment is now in the range of 30,000 to 40,000 new jobs per month.
Why This Matters to You
Job losses affect real people across every sector. If you work in healthcare, manufacturing, tech or the federal government, this report reflects an economic environment that is increasingly difficult for workers. Rising oil prices from the Iran conflict are adding inflationary pressure on top of an already fragile jobs market, squeezing households from both sides.
For anyone watching their savings or planning major financial decisions, the Fed’s next move on interest rates matters enormously. A July rate cut would mean mortgages, car loans and credit card rates stay elevated for longer. It is worth thinking about: If the economy is averaging fewer than 5,000 new jobs per month under the current administration, is that a sustainable trend? With inflation rising and job growth stalling, are the conditions building for a recession? And with federal workforce cuts of 330,000 already recorded, what is the long-term impact on public services and the communities that depend on them?
