In February, the U.S. economy surprisingly lost jobs, with employers cutting 92,000 positions amid growing economic uncertainty. This figure sharply contrasts with the expectations of economists, who had anticipated a gain of 59,000 jobs.
February 2026 Employment Report Highlights
The Labor Department released a report indicating a 4.4% unemployment rate, slightly above the 4.3% predicted. Additionally, there were revisions to previous months’ employment data: December’s numbers were adjusted down by 65,000 jobs, and January saw a decrease of 4,000 from earlier reports.
In total, the employment figures for December and January now show a drop of 69,000 jobs compared to earlier estimates.
Reasons Behind the Revisions
Job Sector Changes in February 2026
Private sector payrolls fell by 86,000, quite a departure from the 65,000 increase that economists were forecasting. January’s previously reported gain of 172,000 was also adjusted down to 146,000. In the government sector, a loss of 6,000 jobs was noted, with federal jobs decreasing by 10,000, although state positions rose by 5,000.
Manufacturing jobs dipped by 12,000, disappointing forecasts that had expected an increase. The healthcare sector also saw a notable decrease of 28,000 jobs. Some of these losses stemmed from strikes, particularly losing 37,400 jobs in doctors’ offices, while hospitals managed to gain 11,600 jobs. Over the past year, the healthcare industry has averaged a monthly gain of about 36,000 jobs.
The information sector lost another 11,000 jobs, continuing a trend of declines. Construction also faced a setback, losing 11,000 jobs in February after a gain of 48,000 the month prior.
In a more positive light, the social assistance sector did add 9,400 jobs, particularly in personal and family services. However, the transportation and warehousing industry saw a loss of 11,300 jobs, with courier services losing significant amounts despite some gains in air transport.
Impact on Workers from the Job Market
The number of long-term unemployed individuals remained around 1.9 million in February, representing a notable increase from last year’s 1.5 million. This group is particularly concerning, as they now represent over 25% of all unemployed individuals.
Moreover, the number of people working part-time for economic reasons decreased by 477,000, leaving about 4.4 million in that situation. These individuals typically seek full-time work but are limited by reduced hours or availability of positions.
Expert Insights on the Employment Report
“Several factors may have influenced February’s data,” commented Ellis Osenbaugh from JP Morgan Wealth Management. Yet, he noted that job growth has considerably slowed compared to 2024 and much of 2025. This situation puts pressure on the Fed, particularly amid rising oil prices due to ongoing Middle Eastern tensions.
Jeffrey Roach, chief economist at LPL Financial, emphasized that the labor market appears stagnant with disappointing job growth, with three-month averages indicating only 6,000 jobs added, while the six-month average has gone negative for four of the last five months. “Looking ahead, we could see an uptick in the unemployment rate,” he suggested.
Implications for the Federal Reserve
The recent job report hasn’t shifted expectations regarding interest rates, with market indicators showing a strong likelihood that the Fed will maintain the current rates during their upcoming meetings. According to CME’s FedWatch tool, there’s about a 95.5% probability of no change to the 3.5% to 3.75% federal funds rate.
Market Reactions Following the Report
On the market front, trading was initially lower, reflecting concerns from the job report, although some losses moderated as the day progressed. By late morning, the Dow Jones Industrial Average declined by 1.27%, the S&P 500 by 1.1%, and the Nasdaq Composite Index roughly by 0.92%.
