US economy unexpectedly sheds 92,000 jobs in February

The US economy lost jobs last month, an unexpected contraction that has renewed questions about whether the labour market in the US might be starting to crack.

Payrolls in the US dropped by 92,000 and the unemployment rate ticked up to 4.4%, according to the latest official figures, surprising analysts who had expected hiring to remain stable.

It marked the biggest monthly job loss since October, when the US government shut down, and came amid concerns that a jump in oil prices sparked by the US-Israel war in Iran could threaten growth.

Nearly every sector shed jobs including healthcare, typically a source of strength, which was hit by strikes last month.

Employment in the federal government also continued to drop, shrinking by 10,000 last month. Since hitting a peak in October 2024, federal government employment has dropped by 330,000 or 11%, the Labor Department said.

It also said job gains in December and January were lower than initially estimated.

Even if healthcare employment bounces back, as expected, the figures undercut hopes that hiring might be starting to accelerate after the 2025 slowdown, which was the weakest year for jobs since the pandemic, said Samuel Tombs, chief US economist for Pantheon Macroeconomics.

"What stabilisation?" he wrote in a note after the figures were published. "The idea the labor market has turned a corner implodes with this report."

The US central bank would typically respond to a weakening labour market by cutting borrowing costs, in hopes of giving the economy a boost.

But analysts said the risk that a sustained leap in oil prices could put upward pressure on prices may give policymakers pause for thought.

"Today's numbers may have put the Fed between a rock and a hard place," said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.