US unexpectedly sheds 92,000 jobs, unemployment rate rises

• US employers cut 92,000 jobs in February, unemployment at 4.4%
• Health care lost 19,000 jobs, partly due to strike activity
• Average hourly earnings increased by 0.4% for a second month

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US employers unexpectedly cut jobs in February and the unemployment rate rose, pointing to lingering fragility in a labor market that was thought to be stabilizing.

Nonfarm payrolls decreased 92,000 last month after a strong start to the year, according to Bureau of Labor Statistics data out Friday. The unemployment rate climbed to 4.4%. The decline in payrolls — which was one of the largest since the pandemic — partly reflected a decrease in health care employment due to strike activity.

The report calls into question whether the labor market is actually stabilizing after the worst year for hiring outside of a recession in decades. While job growth jumped at the start of the year and unemployment insurance claims have settled at a low level, companies may be starting to follow through on a series of previously announced layoffs.

And a recent trend in productivity gains illustrates how spending on artificial intelligence has allowed some firms to get by with leaner staffing.

“The idea the labor market has turned a corner implodes with this report,” Samuel Tombs, chief US economist at Pantheon Macroeconomics, said in a note.

The figures could refocus the Federal Reserve’s attention on the jobs market as it assesses how long to hold interest rates steady. Policymakers have been more attuned to inflation lately — even before the US-Israeli war on Iran sparked concerns among investors about price pressures.

Stock futures remained lower and Treasury yields rose after the report.

The pullback in payrolls included declines in leisure and hospitality as well as construction, which may have stemmed from inclement weather in the month. Other sectors that cut jobs included manufacturing, transportation and warehousing and information.

Health care and social assistance — which accounted for the majority of overall job growth last year — shed nearly 19,000 jobs. Economists had predicted a strike by more than 30,000 Kaiser Permanente employees for most of the month would weigh on the sector’s payrolls.

In a separate report out Friday, US retail sales declined in January, restrained by weakness at auto dealers as winter weather-related disruptions tempered some activity.

Population Estimates

The jobs report is composed of two surveys — one of businesses, which produces the payrolls figures, and another of households. The latter included new population estimates from the Census Bureau, which normally are released with the January report but were delayed by last year’s record-long government shutdown.

After the Trump administration’s crackdown on immigration last year, the population was marked down, also drastically lowering the size of the labor force and household survey level of employment.

The participation rate — the share of the population that is working or looking for work — fell to the lowest level since 2021. The rate for workers of ages 25-54, also known as prime-age workers, also declined.

Economists also pay close attention to wage gains as a source of consumers’ propensity to spend. The report showed average hourly earnings rose a solid 0.4% for a second month.

The report contrasts from some other recent data that had suggested the labor market was finding its footing. Unemployment claims are settling near some of the lowest levels seen in the last year, and layoff announcements subsided in February after surging at the start of 2026.

Employment levels have been “generally stable” in recent weeks, according to the Federal Reserve’s Beige Book survey of regional business contacts out earlier this week.

It remains to be seen how AI will impact the labor market going forward. Oracle Corp. is planning to ax thousands of jobs to offset rising costs from a massive buildout in data centers, and some of the cuts will be aimed at categories it sees less of a need for due to the technology.

On the other hand, AI is currently having “little to no impact” on the hiring plans of ZipRecruiter Inc.’s customers, Chief Executive Officer Ian Siegel said on a Feb. 25 earnings call.