U.S. employers unexpectedly laid off workers in February and the unemployment rate rose, raising questions about the health of the labor market.
After a strong start to the year, nonfarm payroll employment fell by 92,000 last month, data from the U.S. Bureau of Labor Statistics showed on Friday. The unemployment rate climbed to 4.4%. The decline in employment reflects in part a decline in health care employment as a result of strike activity.
The report questions whether the labor market has truly stabilized after its worst year for hiring outside of a recession in decades. Although job growth surged at the start of the year and unemployment insurance claims remained low, companies are likely to begin implementing a series of previously announced layoffs. Recent trends in productivity improvements suggest that spending on artificial intelligence is enabling some companies to weather the storm by downsizing their workforces.
The data could allow the Fed to refocus its attention on the job market as it assesses how long to keep interest rates steady. Policymakers have become more sensitive to inflation recently — even before the U.S.-Israeli war with Iran stoked investor concerns about price pressures.
Stock futures remained lower and Treasury yields fell following the report.
