U.S. employers unexpectedly cut 92K jobs in Feb (+

U.S. employers unexpectedly cut 92K jobs in Feb (+55K exp) and the unemployment rate rose to 4.4% (+4.3% exp). This was partly due to a decline in health care employment due to strike activity, and severe winter storms in Feb.

The decline in jobs was one of the largest since Covid and the report calls into question whether the labor market is actually stabilizing after the worst year in decades for hiring outside of a recession.

The figures are likely to refocus the Fed’s attention on job growth as it assesses how long to hold interest rates steady. Policymakers have been more attuned to inflation lately, given the 25% spike in brent crude since the US-Israeli war on Iran began last week, leading to concern about rising energy input prices and inflation expectations.

The pullback in payrolls included declines in leisure and hospitality as well as construction, which likely stemmed from inclement weather in February. Other sectors that cut jobs included manufacturing, transportation and warehousing and information. Health care and social assistance — which accounted for the majority of overall job growth last year — shed nearly 19,000 jobs. A strike by more than 30,000 Kaiser Permanente employees for most of the month would weighed heavily on that sector’s payrolls.

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.

The report contrasts from some other recent economic data that had suggested the labor market was improving. Unemployment claims are settling near some of the lowest levels seen in the last year, and layoff announcements subsided in February after surging at the start of 2026.

While futures are down sharply pre-mkt (SPX -1.3%, NDX -1.6%) following the jobs report, we believe the market will shrug this as a one-off due to a combination of adverse weather, strikes, and a change in govt data collection rather than a sign that the economy is suddenly declining.