February Jobs Report: Gains Offset from January
February Jobs Report: Gains Offset from January
The February Employment Report proves that one month is not a trend. January's labor market gains reversed course in February, with employment declining by 92,000 jobs, far off from consensus estimates. Outside of October's government shutdown, the longest in history, this is the largest monthly job loss since 2020.
The unemployment rate ticked up to 4.4%, reflecting the broad-based job losses, but is still historically low. Along with low initial claims, unemployment remains stable.
The overall drop was also shaped by a pullback from one of the labor market's biggest engines: healthcare. In stark contrast to its monthly average of 36,000 jobs added, healthcare shed 28,000 jobs in February, largely due to ongoing strikes across the industry.
Federal government employment continued its downward trend, now sitting 330,000 jobs (11%) below the October 2024 peak.
Looking ahead, the labor market may face increased tightness once hiring activity resumes. The February report incorporated updated population estimates through 2026, which pushed labor force participation down to 62%. Outside of the COVID pandemic and its immediate recovery period, this is the lowest level since the 1970s. That said, the number of people working part-time for economic reasons continued to decline, as did marginally attached and discouraged workers, signaling that conditions are soft but not deteriorating further.
On a brighter note, wage growth outperformed expectations, rising to 3.8% year-over-year.
Revisions for recent months added further headwinds to the 2025 outlook: December job growth was revised into negative territory, and total 2025 job growth now stands at 116,000, below January's revised gain of 126,000, underscoring just how sharp that reversal was. With February's decline leading to a three-month average of near zero gains, it may be some time before the labor market finds firm enough footing for a new trend to take hold.