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US Unexpectedly Sheds 92,000 Jobs, Unemployment Rate Rises
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March 6, 2026
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4:43Now PlayingClaudia Sahm, Chief Economist at New Century Advisors, reacts to the February jobs report.
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 steadying after the worst year for hiring outside of a recession in decades. While job growth jumped in January 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. The pullback in payrolls included declines in leisure and hospitality as well as construction, which may have stemmed from inclement weather in the month. In addition to health care, manufacturing, transportation and warehousing and information also cut jobs.
Revisions also revealed that payrolls fell in December. The report suggests January’s strength was a “one-off,” said Veronica Clark, an economist at Citigroup Inc.
In a separate report 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 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. The jobless rate had recently leveled off after rising in the back half of last year and unemployment insurance claims have settled in a low range. Employment levels have been “generally stable” in recent weeks, according to the Fed’s Beige Book survey of regional business contacts out Wednesday.
“You’re never going to completely change the narrative with one report, but I think it does call into question just how firm is that stabilization?” said Michael Pugliese, a senior economist at Wells Fargo & Co. “Is it fragile? Or is it well established? There’s a big difference between those two.” 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.
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