February 2026 jobs report:

The U.S. economy lost jobs in February, marred by severe winter conditions and a strike at a major health care provider, the Bureau of Labor Statistics reported Friday.

Nonfarm payrolls fell 92,000 this month, compared with a forecast of 50,000, falling below the downwardly revised January total of 126,000. February marked the third time employment fell in the past five months, following a sharp revision in December that showed a decline of 17,000.

At the same time, the unemployment rate rose to 4.4% as jobs decreased in key areas. A broader measure of unemployment, which includes discouraged workers and those taking part-time jobs for economic reasons, fell 7.9%, or 0.2 percentage points, below its January level.

Health care, the main driver of payroll growth last year at least, suffered a loss of 28,000, largely due to a strike at Kaiser Permanente that laid off more than 30,000 workers in Hawaii and California. Although the strike has since been resolved, it was removed from the job total because it occurred during BLS survey week.

Even though the jobs picture was weak, wages rose more than expected. Average hourly earnings rose 0.4% for the month and 3.8% from a year ago; both were 0.1 point above estimates.

“I think it tells us that maybe there were too many hopes that the labor market was stabilizing,” Mary Daly, president of the Federal Reserve Bank of San Francisco, told CNBC. “We also have inflation pressure above the target and oil prices are rising. We don’t know how long it will last, but both of our targets are now at risk and we have to keep our eyes on both.”

Information services, a sector affected by AI-driven disruptions, also lost 11,000 jobs, part of a 12-month trend in which the industry is losing an average of 5,000 jobs per month. Despite tariffs aimed at attracting jobs from abroad, there was a loss of 12,000 in manufacturing.

Federal government employment also fell by 10,000 during the month. President Donald Trump’s efforts to cut federal payrolls have seen a decline of 330,000 jobs, or 11% of the total workforce, since October 2024, a few months before Trump took office, according to the BLS.

Transportation and storage decreased by 11,000. Benefits was one of the few sectors to post gains, up 9,000. The weather-sensitive construction sector lost 11,000 jobs after experiencing an increase of 48,000 in January.

Long-term unemployment has also increased further; The average duration of unemployment was 25.7 weeks, the longest period since December 2021.

Daly warned that labor market data is volatile.

“I don’t think you can review this report, but I also think you shouldn’t evaluate more than a month’s worth of data,” he said.

The report came at a time when economic signals were mixed.

Jefferies economist Thomas Simons called the February payrolls decline “a perfect storm of temporary drift coming together after pressure on trend in January.”

“When we look at the sectors affected by the weather and the strike that ended on February 23, this is still a weak employment figure,” Simons added. “We don’t think this is a sign of worse and worse business pressures coming, but the risk of a downturn has certainly increased.”

While employment gains have been difficult to achieve, layoffs have also been fairly modest, with a few notable exceptions.

Inflation had been moderate, but a recent rise in gas prices following conflicts in the Middle East has raised questions about the possibility of a new increase.

Elsewhere, economic growth remains strong, with reports this week showing both the service and manufacturing sectors are expanding. Consumers are doing pretty well, although there are growing signs that most spending is being done by upper-income earners.

White House economic adviser Kevin Hassett said average payroll growth over the past few months is in line with the trend given the White House’s efforts against illegal immigration. The economy has seen an average of fewer than 5,000 new jobs per month since Trump took office in January 2025.

“On average, this is about what we would expect to see because immigration is so low that breakeven unemployment is probably in the 30,000 to 40,000 jobs per month range,” the director of the National Economic Council told CNBC. he said. “I think that’s consistent with everything we’ve seen that the economy is really strong.”

As a result, Federal Reserve officials have taken a cautious approach to policymaking following a series of rate cuts. Most central bankers have advocated a wait-and-see approach as they monitor both the impact of interest rate cuts and geopolitical factors such as tariffs and the Iran war.

Following the jobs report, traders moved their expectations for the next cut to July, pricing in a higher likelihood of two cuts before the end of the year, according to CME Group’s report. FedWatch Indicator of futures market pricing.

Fed Governor Christopher Waller said early in the morning that the weak employment report could affect policy. Waller is in the minority of Federal Open Market Committee members pushing for imminent cuts.

“If we get a bad number, January is revised to a really low number… the question is, why are you just standing there? So depending on the data this week I could definitely see this meeting going the other way and [how] the [consumer price index] It’s coming next week,” Waller said on Bloomberg News.

The household survey used to calculate the unemployment rate showed an even weaker economic picture. In this section of the report, it was noted that there was a decrease of 185,000 people in the number of people reporting to work and an increase of 203,000 people in the unemployment level. The labor force participation rate fell to 62%, its lowest level since December 2021.