Economy Sheds 92,000 Jobs as Unemployment Edges Up to 4.4 Percent

The establishment survey showed employers shed 92,000 jobs in February, as almost every major sector shed jobs. With downward revisions to the prior two months’ data, and December now showing losses, the average gain over the last three months is just 6,000 jobs. Nearly every major sector had lost jobs in the month, including health care and social assistance, which showed a loss of 18,600 jobs, partly due to strikes in the sector.

It is likely that the job losses reported in February were at least partly due to bad weather, following an unusually good January prior to the reference period. This could partly explain a gain in construction employment of 48,000 reported in January, followed by a loss of 11,000 in February. But even allowing for a role for weather, the last three months’ data show a weakening labor market.

January Gains in Household Survey Largely Reversed in February Data

In addition to the modest rise in unemployment reversing January’s drop, the improvements in other areas reported in January were also largely reversed. There was a large jump in the share of unemployment due to quits in January, rising from 11.1 percent to 13.8 percent. This fell back to 11.4 percent in February. The willingness of workers to quit a job without another one lined up is an indication of their perception of the strength of the labor market. The February share is extraordinarily low given a 4.4 percent unemployment rate.

There were drops in the duration measures of unemployment in January, which were partially or completely reversed in February. The average duration of unemployment spells rose to 25.7 weeks, the highest level since February of 2022.

There were two areas of improvement that continued in February. There was another drop in the number of people working part-time involuntarily. That figure fell by 480,000 in February and is now below its year-ago level. Also the share of multiple job-holders, which hit a century high in December, stood at 5.2 percent in February, compared to a year-ago share of 5.6 percent.

Unemployment Rate for Black Workers and Young People Rises in February

There had been extraordinary jumps in the unemployment rate for Black workers and young people (ages 20-24) in 2025. These are groups that are typically hit hardest in a weak labor market, so it is not surprising that their prospects would deteriorate more than for prime age (25 to 54) white workers, but the extent of deterioration was still extraordinary.

The situation of both groups had improved in January, with the unemployment rate of Black workers falling from 7.5 percent to 7.3 percent. It rose in February to 7.7 percent, which is still below the 8.2 percent number reported for November. The unemployment rate for young workers rose from 7.0 percent to 7.4 percent, which is still below the 8.3 percent rate reported for November.

Labor Market for College Grads Worsens

The labor market picture for college grads, while still considerably better than for those with less education, is very weak by historical standards. The unemployment rate for grads over age 25 stood at 3.0 percent in February (the same as the January figure with the new population controls), which is the highest since July of 2021. The 69.3 percent employment-to-population ratio (EPOP) is the lowest since February of 2021, although retirement of baby boomers is a factor here.

New Population Controls Lower EPOP

The household survey for February includes new population controls in the household data. These controls, obtained from Census data, provide the basis for underlying population both in total and for specific demographic groups.

The new controls lowered the overall employment-to-population ratio by 0.5 p.p. The employment gain reported for last year is now a reported loss of 426,000. The new controls also show a very different picture for employment of native-born workers. The year-over-year employment gain was just 128k. It had been reported as 840k in the January data. The employment-to-population ratio for native-born workers is down by 0.6 p.p. over the last year.

Health Care Gives Up Its Winning Streak

The 28,000 job loss reported for the health care sector was only the second month of job loss for the sector in the last four years and the largest decline since a loss of 65,300 jobs in January of 2021. Strikes in several cities contributed to the loss, but it is likely it would have been a weak month in any case. The sector had created an average of 36,000 jobs a month in the year to January 2026. Social assistance still added 9,400 jobs.

Goods Sectors All Shed Jobs

Mining, construction, and manufacturing all lost jobs in February, losing 1,400 jobs, 11,000 jobs, and 12,000 jobs, respectively. Manufacturing employment is down 98,000 from its year ago level, while construction is up 42,000.

Restaurants Shed Jobs, Little Change in State and Local Government Employment

Restaurants lost 29,700 jobs in February after gaining 13,200 in January. This is likely a weather story. State and local governments together added just 4,000 jobs. The local sector had been adding an average of 10,000 jobs a month.

Motion Picture Industry Loses 9,500 Jobs in February, Continuing Downward Trend

The motion picture industry has lost 21,000 jobs in the last year. Employment is now down by 112,000, 24.6%, from its peak in November 2022. This likely reflects the growing concentration in the industry.

Wage Growth Steady at 3.8 Percent

The year-over-year pace of wage growth is holding steady at 3.8 percent. This is down slightly from the 4.0 percent pace of 2023-24, but still above the inflation rate. The growth for non-supervisory workers is slightly less at 3.7 percent.

Weaker Labor Market, but Weather Was a Major Factor

The job loss reported for February, together with the downward revisions for the prior two months, is unambiguously bad news, but weather clearly was an important factor. It is likely that unusually good January weather in the period before the reference week contributed to the job gains for the month, so that by itself would make February look worse in comparison. The three-month average is still unambiguously weak, but in a labor market with very low immigration, it is not clear that we should expect much job growth.

In short, this should be seen as a bad sign, but far from cause for panic. While the outcome of the war could have very large implications for the economy, we were not looking at a recession going into it. But the labor market has definitely deteriorated over the last year and this impact is being felt mostly by disadvantaged groups like Black workers and young people, although college grads have also seen a clear deterioration in their labor market prospects.

This first appeared on Dean Baker’s Beat the Press blog.

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