US jobs report: Employers cut 92,000 jobs as unemployment rises to 4.4 per cent

US employers cut 92,000 jobs in February, pointing to renewed strain in the labour market. The Labour Department also said the unemployment rate edged up to 4.4 per cent. Economists had forecast a gain of 60,000 jobs. The report added fresh doubts for businesses and households facing higher costs tied to the war with Iran.

Representative image

Hiring also weakened sharply from January, when companies, nonprofits and government agencies added 126,000 jobs. The government revised earlier figures too. Payroll totals for December and January were reduced by 69,000 jobs. The unexpected drop followed hopes that 2026 would bring a stronger rebound after a weak 2025.

US job market and war with Iran pressures

The outlook for the US job market remained uncertain as the war with Iran pushed oil prices higher. That rise added costs for firms and consumers. Heather Long, chief economist at Navy Federal Credit Union, said companies may delay hiring. "Companies are going to be even more reluctant to hire this spring until the war ends and they can see consumers still spending. Its a tense time for the US economy.\"

Analysts said February disrupted views that conditions were settling. Olu Sonola, head of U.S. economics at Fitch Ratings, said the report changed the narrative. \"Just when it looked like the labour market was stabilising, this report delivers a knock-down blow to that view,\" Sonola said. \"Its bad news whichever way you look at it.\"

US job market job losses across sectors

Job cuts were spread across many industries. Construction firms cut 11,000 jobs, which may have reflected frigid weather. Factories reduced payrolls by 12,000 jobs. Manufacturing has now lost jobs for 14 of the past 15 months. Restaurants and bars shed nearly 30,000 roles, adding to signs of weaker service demand.

Health care, a past source of growth, also moved lower. Healthcare firms cut 28,000 jobs after a four-week strike. The action involved more than 30,000 nurses and other front-line workers. The strike took place at Kaiser Permanente sites in California and Hawaii. Other losses included nearly 19,000 in administrative services and almost 17,000 in courier work.

Not every area declined, though gains were limited. Financial firms added 10,000 jobs in February. Still, the sector has faced job cuts elsewhere in 2026. Pay growth continued despite weaker hiring. Average hourly wages increased 0.4 per cent from January. Wages were 3.8 per cent higher than a year earlier.

US job market and Federal Reserve policy risks

Economists said the Federal Reserve faced a difficult choice. Weak hiring can support arguments for rate cuts. At the same time, war-linked price pressures can make inflation worse. That mix can force the Fed to weigh two competing risks. Eugenio Aleman, chief economist at Raymond James, said, \"This is probably the worst scenario for monetary policy.\"

The job market had been expected to strengthen after a sluggish 2025. Last year, employers added only 15,000 jobs a month. Hiring had slowed as firms dealt with President Donald Trumps tariffs. Companies also reacted to the unpredictable timing of those import taxes. The federal workforce purge and high interest rates added pressure.

Some of the trade shock eased after changes in policy design. Trumps import taxes became smaller and less erratic after a trade truce with China. The US also reached deals with partners including Japan and the European Union. Many firms learned to absorb costs by raising prices. That helped planning, though it also lifted prices for customers.

Brian Bethune, an economist at Boston College, said companies were hit twice. Trumps 2025 tariffs disrupted corporate planning, Bethune said. \"Now, just as theyve 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.\" The extra fuel costs added a new budget strain.

Jay Foreman, CEO of Basic Fun, said recent legal moves could bring some tariff relief. The Supreme Court last month struck down the biggest tariffs. That decision may allow importers to seek refunds for levies already paid. Foreman said refunds could support investment, wage rises, and hiring at the Boca Raton, Florida company.

Basic Fun makes Lincoln Logs and Care Bears. Foreman said, \"We are expecting a record year,\" while also warning about new costs. Under new tariffs sought by Trump, Foreman estimated the company’s tariff bill would more than double. Foreman put the figure at USD 15 million. Part of that rise comes from paying a full year of 2026 tariffs.

The February job losses, upward move in unemployment, and downward revisions to earlier payroll data reshaped the near-term view. Wage growth stayed firm, yet hiring weakened across major sectors. With oil prices higher due to the war with Iran, firms faced added costs. Policymakers and employers now had to respond to mixed signals.

With inputs from PTI