U.S. Payrolls Fall by 92,000 in February as Unemployment Ticks Up to 4.4%

Payrolls post sharp decline

U.S. employers cut 92,000 jobs in February, the steepest monthly loss in nearly a year and a reversal for a labor market that had been one of the economy’s most resilient pillars.

The unemployment rate edged up to 4.4% from 4.3% in January, the Labor Department reported Friday, leaving 7.6 million people out of work. Payrolls fell for the first time this year and by the largest amount since October 2025, when hiring also turned sharply negative.

In its monthly Employment Situation report, the Bureau of Labor Statistics said “total nonfarm payroll employment edged down by 92,000 in February, and the unemployment rate changed little at 4.4 percent.” The decline, combined with sizable downward revisions to late-2025 data, reinforces evidence that the once red-hot job market has cooled into something closer to a stall.

Revisions deepen the slowdown narrative

Economists had expected employers to add roughly 50,000 to 60,000 jobs last month and for the unemployment rate to be little changed. Instead, the Labor Department reported the first net payroll loss of 2026 and revealed that job growth at the end of last year was weaker than initially reported.

• December was revised from a 48,000 increase to a 17,000 loss.
• January was revised down to 126,000 from 130,000.

Taken together, December and January payrolls are now 69,000 lower than first estimated, underscoring a pattern of lackluster hiring that stretches back through much of 2025.

BLS officials also noted that “payroll employment changed little on net in 2025.” Over the 12 months through February, nonfarm payroll employment rose by an average of about 13,000 jobs per month, far below the pace seen during the post-pandemic rebound.

Sector-by-sector: health care strike effects, continued public-sector pullback

Behind February’s headline decline was a rare contraction in health care, long one of the economy’s most reliable sources of new jobs. Employment in the sector fell by 28,000, a sharp swing from January’s 77,000 increase. The Labor Department said the drop “reflected strike activity,” mainly in doctors’ offices.

Employment in offices of physicians fell by 37,000 in February, while hospitals added 12,000 jobs. Over the past year, health care jobs had been rising by an average of 36,000 per month, making the February decrease an unusual, strike-driven break from trend.

Other notable moves:

• Information (including publishers, telecom, and many tech and media firms) shed 11,000 jobs, continuing a yearlong slide.
• Federal government payrolls declined by 10,000. Since peaking in October 2024, federal employment has fallen by about 330,000 jobs—an 11% drop.
• Transportation and warehousing employment was down 11,000 on net. The sector is down 157,000 jobs (about 2.4%) from its February 2025 peak as pandemic-era logistics demand continues to unwind.

Other major industries—including construction, manufacturing, wholesale and retail trade, financial activities, professional and business services, leisure and hospitality, and other services—showed little change in February, suggesting weakness is not yet broad-based.

Wages rise even as hiring weakens

Despite the payroll loss, workers who have jobs are still seeing pay increases. Average hourly earnings for all private-sector employees rose by 15 cents (0.4%) to $37.32 in February. Over the past 12 months, wages are up 3.8%.

With consumer prices rising at an annual rate of about 2.4% in January, those pay gains imply modest real wage growth for many households. The average workweek held steady at 34.3 hours, and manufacturing hours dipped only slightly.

Uneven unemployment and growing long-term joblessness

The cooling is not being felt evenly. Unemployment in February was 3.7% for white workers and 4.1% for adult women, but 7.7% for Black workers and 5.2% for Hispanic workers. The jobless rate for teenagers was 14.9%.

The number of people unemployed for 27 weeks or longer was 1.9 million, up from 1.5 million a year earlier. Long-term unemployed workers now account for about a quarter of all jobless Americans.

What it means for the Fed

The numbers arrive at a pivotal moment for the Federal Reserve, which has kept its benchmark interest rate in a range of 3.5% to 3.75% while inflation has eased but not fully returned to target.

The February jobs report is likely to intensify debate over whether the Fed should begin cutting rates or hold them steady to ensure price pressures are contained. Inflation has come down from the multi-decade highs reached in 2022, with core consumer prices rising at a 2.5% annual rate in January, just above the Fed’s 2% goal. But wage growth and service-sector inflation remain firm, and officials led by Chair Jerome Powell have signaled they want more evidence that price pressures are fully under control before cutting rates.

Analysts also warned against over-reading a single month’s data—particularly one distorted by strikes. First Trust Advisors characterized the report as weak but “not a reason to panic,” noting the temporary nature of the health-care disruption and the absence of widespread layoffs across industries.

Technical changes complicate comparisons

Beginning in January, the Labor Department incorporated new population estimates from the Census Bureau into its household survey, which is used to calculate unemployment and participation rates. The updated controls reduced estimated levels of employment and the labor force at the end of 2025 but left the unemployment rate essentially unchanged—meaning comparisons between early 2026 and earlier months should be made with care.

What comes next

The February numbers give ammunition to both sides of the Fed debate. Advocates of lower rates can point to declining payrolls, negative revisions, and a gradual rise in long-term unemployment as signs policy is too tight. Those urging caution can emphasize that 4.4% unemployment is still moderate by historical standards and that pay is rising faster than prices.

Economists will be watching closely to see whether health-care employment rebounds as striking workers return, whether federal and information-sector cuts deepen, and whether unemployment continues its slow climb.

For now, the February jobs report marks another step away from the extraordinary tightness of the early pandemic recovery toward a more fragile equilibrium—one in which the labor market is no longer booming, but the full extent of the slowdown has yet to be revealed.