Agenda-setting intelligence, analysis and advice for the global fashion community.
The US economy unexpectedly shed jobs in February and the unemployment rate increased to 4.4 percent, potentially hinting at a deterioration in labour market conditions that could put the Federal Reserve in a difficult spot amid rising oil prices.
The decline in nonfarm payrolls reported by the Labor Department in its closely watched employment report on Friday was the sixth since January 2025 and the second largest. The labour market stumbled in 2025 amid what economists said was uncertainty stemming from President Donald Trump’s sweeping tariffs, which he pursued under a law meant for use in national emergencies.
Though the import duties were struck down by the US Supreme Court, Trump responded to the ruling by imposing a 10 percent global tariff and later announced it would rise to 15 percent. Economists saw a downside risk to the labour market from a prolonged war in the Middle East, which is driving up oil prices and causing stock market volatility.
Despite Trump’s emphasis on restoring domestic manufacturing jobs through measures like import tariffs, factory employment has now fallen in all but one month since his return to the White House.
ADVERTISEMENT
“Today’s numbers may have put the Fed between a rock and a hard place,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Significant weakening in the labour market would support a rate cut, but given the risk that higher-for-longer oil prices could trigger another inflation surge, the Fed may feel compelled to remain on the sidelines.”
Nonfarm payrolls decreased by 92,000 jobs last month after a downwardly revised 126,000 increase in January, the Labor Department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast payrolls advancing by 59,000 jobs after increasing by a previously reported 130,000 in January.
Estimates ranged from a loss of 9,000 jobs to an increase of 125,000 positions. Economists said jobs gains in January had been boosted by an update of the birth-and-death model, which the BLS uses to estimate how many jobs were gained or lost because of companies opening or closing in a given month.
The US central bank holds its next policy meeting on March 17-18 and economists still expect the Fed to keep its benchmark overnight interest rate in the 3.50 percent-3.75 percent range. The odds of a June rate cut, however, increased. The dollar was little changed against a basket of currencies. US Treasury yields fell.
The decline in payrolls last month was nearly across the board and was led by the healthcare sector, which shed 28,000 positions following a large increase of 77,000 in January.
Employment at physicians’ offices dropped by 37,000 jobs, mostly reflecting a strike by 31,000 healthcare workers at Kaiser Permanente and inclement weather. The strike in California and Hawaii has since ended.
Employment in the information sector dropped by 11,000, the federal government shed another 10,000 jobs. Since reaching a peak in October 2024, federal government employment is down by 330,000, or 11.0 percent amid a campaign by the White House to shrink its footprint.
Transportation and warehousing payrolls dropped by 11,000, weighed down by job losses among couriers and messengers. Construction employment decreased by 11,000, likely because of inclement weather. There were, however, moderate job gains in the social assistance sector.
ADVERTISEMENT
The BLS incorporated new population controls that were delayed by last year’s 43-day government shutdown. The Trump administration’s immigration crackdown has reduced labour supply, also contributing to the labour market slowdown.
The Census Bureau last month estimated the nation’s population increased by just 1.8 million people, or 0.5 percent, to 341.8 million in the year ending June 2025.
The population controls only impacted January household survey data. That means the month-on-month levels of household employment, unemployment and labour force among other metrics are not directly comparable. The unemployment rate was at 4.3 percent in January. Despite the rise last month, the jobless rate is still low by historical standards and economists said they would get concerned only if it pushed above 4.5 percent.
By Lucia Mutikani; Editor: Chizu Nomiyama
Learn more:
What Happened to Fashion’s Entry Level Jobs?
With hiring slowing and AI reshaping entry-level work, recent graduates are turning to a mix of old-school tactics and unconventional paths to get a foothold.
