The U.S. job market is still under strain: report shows unemployment rose to 4.4% in February
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%.
The Labor Department reported Friday that hiring deteriorated from January, when companies, nonprofits and government agencies added a healthy 126,000 jobs. Economists had expected 60,000 new jobs in February.
Revisions also cut 69,000 jobs from December and January payrolls.
The job market had been expected to rebound this year from a lackluster 2025 when the economy, buffeted by President Donald Trump’s erratic tariff policies and the lingering effects of high interest rates, generated just 15,000 jobs a month.
Construction companies cut 11,000 jobs last month, which likely reflects reflect 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.
The outlook for the job market – and the entire economy – is clouded by the war with Iran.
Employers were reluctant to hire last year because of uncertainty over President Donald Trump’s tariffs – and the unpredictable way he rolled them out.
High interest rates, engineered by the Federal Reserve to combat a burst of inflation following the COVID-19 pandemic, also weighed on the job market in 2025.
The impact of Trump’s aggressive trade policies may recede in 2025. 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.
Businesses needed “a year to bake some of those costs into their business model, and now it’s time to get back to growth mode,” said Andy Decker, CEO of Atlanta-based Goodwin Recruiting.
The Supreme Court has also struck down the biggest and boldest of Trump’s tariffs – though he is replacing them with new ones.
Still, hiring continues to lag far behind the hiring boom of 2021-2023 when the economy was bouncing back from pandemic lockdowns and the United States was adding nearly 400,000 jobs a month. Many economists describe today’s job market as “no-hire, no-fire”: Companies are reluctant to add workers but don’t want to let go of the ones they have.
Luckily, achieving good-enough job growth is easier these days.
Until a year or two ago, employers needed to hire well over 100,000 people a month to keep the unemployment rate from rising.
But Baby Boomer retirements and President Donald Trump’s deportations mean there are fewer people competing for work. So the break-even point is much lower – anywhere from zero to 50,000 jobs a month, said Joe Brusuelas, chief economist at the tax and consulting firm RSM. “Under the current conditions, 70,000 should be considered solid,” he said.
Companies may be holding off on hiring as they buy, install and figure out how best to use new technologies, including artificial intelligence. AI, after all, potentially means they “can do more with less” and will need fewer workers, especially for entry-level positions, Brusuelas said.
They are thinking, he said, “we’ve invested an awful lot of money in (capital expenditures), and we need to see how much we can produce with our current labor force… The last thing you want to do is hire a lot of young people and then let them go.”
AP Economics Writer Christopher Rugaber contributed to this report.
—Paul Wiseman, AP Economics Writer