American employers unexpectedly shed 92,000 jobs last month, a sign that the labor market remains . The unemployment rate ticked up slightly to 4.4%.
Hiring worsened from January, when businesses, nonprofits and government agencies added a solid 126,000 jobs, the Labor Department reported Friday. Economists had projected 60,000 new jobs in February.
Revisions also reduced December and January payrolls by 69,000 jobs.
February’s surprisingly soft employment picture adds to economic uncertainty over the , which has sent oil prices surging and burdened businesses and consumers with unexpected costs.
“The job market is struggling in the face of so many headwinds,” said Heather Long, chief economist at . “Companies are going to be even more reluctant to hire this spring until the war ends and they can see consumers still spending. It’s a tense time for the U.S. economy.”
The job market had been expected to rebound this year from a when it was buffeted by President Donald Trump’s erratic tariff policies, his reduction of the federal workforce and the lingering effects of high interest rates. In 2025, employers added just 15,000 jobs a month. Hopes for a 2026 recovery grew after January hiring came in above expectations.
“Just when it looked like the labor market was stabilizing, this report delivers a knock-down blow to that view,” said Olu Sonola, head of U.S. economics at Fitch Ratings. ”It’s bad news whichever way you look at it.”
Job losses were broad-based.
Construction firms cut 11,000 jobs last month, likely reflecting frigid weather. Healthcare companies shed 28,000 jobs following a four-week strike by more than 30,000 nurses and other front-line workers at in California and Hawaii. Health care has been one of the job market’s strong points.
Factories eliminated 12,000 jobs and have now lost positions in 14 of the last 15 months. and bars lost nearly 30,000 jobs. Administrative and support services firms cut almost 19,000 jobs, while courier and messenger services shed roughly 17,000.
Financial firms added 10,000 jobs, though job cuts continue to as well this year.
Average hourly earnings rose 0.4% from January and 3.8% from a year earlier.
The outlook for the job market – and the entire economy – is overshadowed by the war with Iran.
The mix of weak hiring and rising inflationary pressures from the war creates a nightmare for the Federal Reserve, which must decide whether to cut interest rates to support the job market or hold off to help curb prices. “This is probably the worst scenario for monetary policy,″ said Eugenio Aleman, chief economist at Raymond James.
Employers were hesitant to hire last year because of uncertainty over Trump’s – and the unpredictable way he rolled them out.
The impact of Trump’s aggressive trade policies may fade in 2026. His import tariffs became smaller and less volatile after he reached a trade truce with China last year and deals with key U.S. trade partners like Japan and the European Union. Many businesses have also learned to offset tariff costs, often by passing them along to customers via higher prices.
Brian Bethune, an economist at Boston College, said Trump’s 2025 tariffs were a shock to companies’ business plans. Now, just as they’ve adjusted to them, “ what! All of a sudden their 2026 business plans are upended by an increase in fuel costs’’ caused by the war with Iran.
Jay Foreman, CEO of toy company Basic Fun, expects some relief from Trump’s tariffs after the Supreme Court last month the biggest ones and potentially created a path for importers to get refunds for the levies they paid. The refunds would let Foreman invest more in his Boca Raton, Florida, company, which makes Lincoln Logs and Care Bears. He can also give more generous raises to employees and hire new people.
“We are expecting a record year,’’ he said.
Yet under new tariffs sought by Trump, Foreman estimates Basic Fun’s tariff bill will more than double this year to $15 million. That’s partly because the firm will pay for a full year of Trump tariffs in 2026 – last year’s tariffs weren’t rolled out until spring or later.
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AP Economics Writer Christopher Rugaber contributed to this report.
Anne D’Innocenzio reported from New York.