The U.S. economy shed 92,000 jobs in February, the Bureau of Labor Statistics estimated March 6, falling far short of forecasters’ expectations, and signaling the overall labor market is still in low-hire mode as employers navigate tariff-related inflation pressures, AI adoption, and geopolitical uncertainty.
The February estimate comes in much lower than the BLS’ now-revised gain of 126,000 jobs added in January, which was much higher than the agency’s revised figures for 2025, when U.S. employers added only 181,000 jobs throughout the entire year, or about 15,000 a month.
Over the past year, economic output has continued to grow as job gains have slowed, implying higher productivity per worker. Thrivent Chief Financial and Investment Officer David Royal said AI may be contributing to productivity gains, but it’s still too early to attribute the entire divergence between GDP and employment to AI.
“I don’t think companies really know the impact of AI on employment either,” Royal told USA TODAY. “They’re not ready to let people go, but they don’t want to hire a bunch of people because they’re not sure they’re going to need them, and I think that’s what’s driving the low-hire, low-fire environment.”
The unemployment rate rose to 4.4% in February, up from 4.3% in January, and up from 4.1% a year ago. Bankrate Senior Economic Analyst Mark Hamrick noted ahead of the report that less immigration and an aging workforce mean fewer new jobs are needed to keep the rate steady.
Which industries lost, and which sectors added, jobs?
Health care, typically a steady engine of job growth, lost 28,000 jobs in February. That’s down from a revised gain of 77,000 in January, though the dip can primarily be explained by a major strike of Kaiser Permanente workers during the BLS’ survey period.
Employment in the information sector also trended down in February, shedding 11,000 jobs. The federal government cut another 10,000 jobs.
The social assistance sector was one of the few bright spots, adding 9,000 jobs in February.
Employment in other industries, including construction, manufacturing, and trade, was little changed over the month, the BLS said.
Hourly earnings tick up, but wage gains are uneven
Average hourly earnings for all employees on private, nonfarm payrolls rose by 0.4%, to $37.32in February, the BLS said, adding that over the last year, average hourly earnings have increased 3.8%.
But, the K-shaped economy is showing up in wage gains, too.
While higher-income wage growth rose to 4.2% over the year in February, middle-income wage growth slowed to 1.2%, and lower-income wage growth slowed to 0.6%, over the same period, according to a Bank of America Institute report.
One reason wage gains are cooling for those workers may be that switching jobs now doesn’t come with the same salary bump it used to during “the Great Resignation.” People who changed jobs in January saw raises that were less than half of what job switchers were getting in 2019, according to Bank of America internal data.
How is the job market overall?
A March 5 Challenger, Gray & Christmas report revealed employers announced 48,307 job cuts in February, down 55% from January, and down 72% from February 2025.
Still, job seekers are struggling to find work, recent college grads are competing with AI, and workers are clinging to their jobs fearing they won’t be able to land a new one.
A third of workers surveyed by MyPerfectResume, a resume-building platform, said they were worried about losing their job in 2026, and nearly half predicted the labor market will get worse.
Private employers announced plans to hire 12,755 workers in February, a 140% increase from 5,306 in January, according to the Challenger report. So far this year, it found, hiring plans are down 56% compared to the first two months of 2025.
Will the Fed cut rates in March?
After three cuts to the federal funds rate, which serves as a benchmark for interest rates around the country, late last year, the Federal Open Market Committee opted to pause at its last meeting in January.
Oxford Economics economists on March 4 predicted the Fed will hold off on tweaking the rate until it is able to assess the economic impact of war with Iran, and projected the FOMC will lower rates twice in 2026, with the first reduction coming in June. By then, the committee is expected to have a new chair.
As of March 6, forecasters predict the FOMC will continue to hold the rate steady at a range of 3.5% to 3.75% at its next two-day meeting on March 17 and 18. Before then, committee members will review the February employment numbers and the BLS’ Consumer Price Index report due out March 11.
“They’re going to be more focused on probably the inflation data than the employment data. If the inflation were to come down, they would cut,” Royal said. “I don’t think they need to see more employment weakness to cut, but I do think they probably need to see more progress on inflation.”
This is a developing story and will be updated to add new information.
Reach Rachel Barber at [email protected] and follow her on X @rachelbarber_
This article originally appeared on USA TODAY: US shed 92,000 jobs, unemployment ticked up to 4.4% in February
Reporting by Rachel Barber, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
