February Jobs Shock: 92K Lost
The US economy lost 92,000 jobs in February versus expectations for a 59,000 gain, marking the first net jobs loss in over two years. Unemployment jumped to 4.4% while continuing unemployment filings rose to 1.87 million. The surprise negative print signals a potential turning point in the labor market.
The job losses were widespread across multiple sectors. The healthcare industry shed 28,000 jobs, leisure and hospitality lost 27,000, the information sector cut 11,000, and the federal government reduced payrolls by 10,000. A significant portion of the healthcare job decline was attributed to temporary factors, as a strike at Kaiser Permanente sidelined over 30,000 workers during the week the survey was conducted. The healthcare sector had been a consistent source of job growth, adding an average of 36,000 jobs per month over the previous year. Adding to the negative headline number, job gains for the previous two months were revised down by a combined 69,000. December's figures were adjusted from a gain of 48,000 to a loss of 17,000, meaning payrolls have now been negative in two of the last three months. Despite the drop in employment, average hourly earnings continued to climb, rising 0.4% for the month to $37.32. This marks a 3.8% increase in wages over the past 12 months, keeping the typical worker's earnings ahead of inflation. Further signs of a cooling labor market emerged as the labor force participation rate dipped to 62.0%. This indicates a smaller share of the population is either working or actively looking for work. The mixed data is unlikely to force the Federal Reserve's hand on interest rates immediately. After three rate cuts in 2025, policymakers have signaled a patient approach, and the combination of weaker hiring but firm wage growth reinforces the case for caution.
