WASHINGTON (AP) — U.S. employers unexpectedly cut 92,000 jobs last month, a sign that the labor market remains strong under pressure. The unemployment rate soared to 4.4%.
The Labor Department reported on Friday that hiring has worsened since January, when companies, nonprofits and government agencies added 126,000 jobs. Economists had expected 60,000 new jobs to be added in February.
The revision also cuts 69,000 positions from the December and January payrolls.
Employment conditions were unexpectedly weak in February, adding to economic uncertainty war with iranwhich caused oil prices to soar, resulting in unforeseen costs for businesses and consumers.
“The job market is struggling in the face of so many headwinds,” said Heather Long, chief economist at Navy Federal Credit Union. “Companies will be even more reluctant to hire this spring until the war is over and they can see consumers still spending. This is a stressful time for the U.S. economy.”
The job market this year was previously expected to grow from 2025 is bleak At the time, the economy, battered by the lingering effects of President Donald Trump’s erratic tariff policies and high interest rates, was creating just 15,000 jobs a month. Hopes for a rebound have risen after hiring exceeded expectations in January.
“Just when the labor market seemed to be stabilizing, this report dealt a serious blow to that view,” said Olu Sonora, head of U.S. economics at Fitch Ratings. “This is bad news no matter how you look at it.”
Unemployment is widespread.
Construction companies cut 11,000 jobs last month, likely reflecting the cold weather. More than 30,000 nurses and other frontline workers at Kaiser Permanente in California and Hawaii went on strike for four weeks, and the health care company laid off 28,000 workers. Healthcare has always been one of the strong points of the job market.
The factory is laying off 12,000 workers, with layoffs occurring in 14 of the past 15 months. Restaurants and bars lost nearly 30,000 jobs. Administrative and support services companies cut nearly 19,000 jobs, and express and messenger services companies cut nearly 17,000 jobs.
Financial firms add 10,000 jobs, but layoffs continue hit the department This year is no different.
Average hourly wages rose 0.4% from January and 3.8% from the same period last year.
The outlook for the job market and the entire economy has been clouded by the war with Iran.
Employers were reluctant to hire last year amid uncertainty about Trump’s administration tariff — and the unpredictable way he rolls them out.
The impact of Trump’s aggressive trade policies may fade in 2025. After he struck a trade truce with China last year and struck deals with major U.S. trading partners such as Japan and the European Union, his import duties became smaller and less volatile. Many businesses have also learned how to offset the cost of tariffs, often by passing them on to customers through higher prices.
Boston College economist Brian Bethune said Trump’s 2025 tariffs have had an impact on companies’ business plans. Now, just as they were adapting to these conditions, “guess what! Suddenly, their 2026 business plans were disrupted by increased fuel costs due to the war with Iran.”
Weak employment and growing inflationary pressures caused by the war have created a nightmare for the Federal Reserve, which must decide whether to cut interest rates to boost the job market or delay cuts to curb rising prices. “This is probably the worst-case scenario for monetary policy,” said Eugenio Aleman, chief economist at Raymond James.
Hiring still lags far behind the hiring boom of 2021-2023, when the economy was recovering from pandemic lockdowns and the U.S. added nearly 400,000 jobs each month. Many economists describe today’s job market as “don’t hire, don’t fire”: companies are unwilling to add workers but don’t want to give up existing workers.
Companies may also delay hiring while they purchase, install and figure out how best to use new technologies, including artificial intelligence. After all, AI may mean they “can do more with less resources” and require fewer workers, especially in entry-level positions, said Joe Brusuelas, chief economist at tax and advisory firm RSM.
He said they were thinking, “We’ve invested a lot of money in (capital spending) and we need to see how much we can produce with the workforce we have…The last thing you want to do is hire a lot of young people and then let them go.”
