Economy loses 92,000 jobs in February

• Key insight: The Bureau of Labor Statistics reported that the economy lost 92,000 jobs in February, signaling a cooling labor market.
• Supporting data: Health care jobs fell by 28,000, while the overall unemployment rate held steady at 4.4%.
• Forward look: The declining job totals could signal to the Federal Reserve that rate cuts are necessary to keep the labor market strong. 

The economy lost 92,000 jobs in February, reinforcing concerns about a cooling labor market and giving the Federal Reserve another reason to keep a close eye on employment as it decides the way forward for interest rates.

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The Bureau of Labor Statistics reported Friday morning that nonfarm payrolls fell by 92,000 last month, though the unemployment rate held steady at 4.4%. 

The decline was driven largely by a 28,000 drop in health-care jobs, reportedly tied to union strikes, joined by continued declines in job counts in information technology and the federal government. Revisions to the two prior months’ data trimmed another 69,000 jobs from prior employment totals, heightening the sense that hiring momentum has slowed after a sluggish 2025.

Wages were relatively stable, with average hourly earnings increasing 0.4% in February, up 3.8% over the past year, suggesting labor costs are continuing to increase despite declines in the number of jobs available. The labor force participation rate held at 62.0%, while long-term unemployment was higher than a year earlier.

In markets, traders were parsing the jobs report as well as the latest developments of the Iran war, one result of which were oil prices were rising sharply again. In early trading, U.S. Treasury yields were higher and markets were lower, with the major U.S. indexes all down more at least 1%.

Last month’s employment report had shown signs of improvement. Workplaces added 130,000 jobs in January and the unemployment rate fell to 4.3 percent, signs of stability after a tepid labor market in 2025. Hiring was driven largely by health care and construction, though some white collar sectors — including the financial sector and the federal government — saw job losses. 

While markets have priced in an expectation that the Fed would keep rates steady at least until the summer, February’s jobs report vindicated skepticism voiced by Federal Reserve Gov. Christopher Waller, who warned last month that January’s hiring bump might prove transitory. 

Waller said in February that if January’s improvement was “revised away or evaporate[d] in February,” it would bolster his argument that the Fed should cut rates. 

In November, call report data analyzed by KBRA Financial Intelligence showed banks were shedding jobs. The data report found that U.S. banks and savings banks employed about 2 million workers as of the end of the third quarter, representing the lowest level since late 2019. 

Earlier this week, concerns about AI-driven job losses reemerged after Jack Dorsey announced  layoffs at Block, citing the way artificial intelligence allows companies to do more with fewer workers. If widely replicated, the trend could carry wider economic consequences, with unemployed workers unable to drive economic growth.