The US lost a surprising 92,000 jobs last month as the unemployment rate
ticked up to 4.4%
[March 07, 2026] By
PAUL WISEMAN and ANNE D'INNOCENZIO
WASHINGTON (AP) — American employers unexpectedly cut 92,000 jobs last
month, a sign that the labor market remains under strain. The
unemployment rate blipped up to 4.4%.
Hiring deteriorated from January, when companies, nonprofits and
government agencies added a healthy 126,000 jobs, the Labor Department
reported Friday. Economists had expected 60,000 new jobs in February.
Revisions also cut 69,000 jobs from December and January payrolls.
The surprisingly weak employment picture in February adds to the
economic uncertainty over the war with Iran, which has caused oil prices
to surge and saddled business and consumers with unforeseen costs.
“The job market is struggling in the face of so many headwinds,” said
Heather Long, chief economist at Navy Federal Credit Union. “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 lackluster
2025 when it was buffeted by President Donald Trump's erratic tariff
policies, his purge 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 rebound rose 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.''
The job losses were widespread.
Construction companies cut 11,000 jobs last month, which likely reflects
frigid weather. And healthcare firms shed 28,000 jobs after a four-week
strike by more than 30,000 nurses and other front-line workers at Kaiser
Permanente in California and Hawaii. Health care has been one of the job
market's strong points.
Factories cut 12,000 jobs and have now lost jobs for 14 of the last 15
months. Restaurants and bars lost nearly 30,000 jobs. Administrative and
support services firms cut nearly 19,000 jobs and courier and messenger
services almost 17,000.
Financial firms added 10,000 jobs, though job cuts continue to hit that
sector as well this year.
Average hourly wages rose 0.4% from January and 3.8% from a year
earlier.
The outlook for the job market – and the entire economy – is clouded by
the war with Iran.
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Construction workers install a lumber roof at a new home build
Tuesday, April 1, 2025, in Laveen, Ariz. (AP Photo/Ross D. Franklin,
File)
 The combination of weak hiring and
increasing inflationary pressures arising from the war creates a
nightmare for the Federal Reserve, which must decide whether to cut
interest rates to help the job market or hold off to help keep a lid
on prices. “This is probably the worst scenario for monetary
policy,″ said Eugenio Aleman, chief economist at Raymond James.
Employers were reluctant to hire last year because of uncertainty
over Trump’s tariffs – and the unpredictable way he rolled them out.
The impact of Trump’s aggressive trade policies may recede in 2026.
His import taxes became smaller and less erratic after he reached a
trade truce last year with China and deals with leading U.S. trade
partners such as Japan and the European Union. A lot of businesses
have also learned how to offset the costs of the tariffs, often by
passing them along to customers via higher prices.
Brian Bethune, an economist at Boston College, said that Trump’s
2025 tariffs were a shock to companies’ business plans. Now, just as
they’ve adjusted to them, “Guess 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 the toy company Basic Fun, expects to get some
relief from Trump’s tariffs after the Supreme Court last month
struck down the biggest ones and potentially created a path for
importers to get refunds for the levies they paid. The refunds would
allow Foreman to invest more in his Boca Raton, Florida, company,
which makes Lincoln Logs and Care Bears. He can also hand out 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 that Basic
Fun’s tariff bill will more than double this year to $15 million.
That is partly because the firm will be paying for a full year of
Trump tariffs in 2026. Tariffs last year were not rolled out until
spring or later.
_____
AP Economics Writer Christopher Rugaber contributed to this report.
Anne D'Innocenzio reported from New York.
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