The U.S. labor market showed unexpected signs of weakness in February, with the economy shedding 92,000 jobs and the unemployment rate edging higher to 4.4%. The latest figures, released Friday by the U.S. Department of Labor, mark the sixth monthly contraction in employment during President Donald Trump’s administration.

The result surprised economists, many of whom had anticipated modest job growth. Forecasts compiled by Reuters projected an increase of around 59,000 positions, while Bloomberg expected 55,000 and Dow Jones predicted roughly 50,000 new jobs.

The unemployment rate rose slightly from 4.3% in January, with more than a quarter of unemployed Americans remaining out of work for over six months, highlighting ongoing challenges in the labor market.

Healthcare and logistics sectors lead declines

February’s job losses followed a downward revision to January’s figures, when employers added 126,000 positions.

Healthcare experienced the steepest decline, cutting 28,000 jobs during the month. Government employment also shrank, with federal payrolls falling by about 10,000 roles, partly reflecting strike activity in states including California, Hawaii, and New York.

The healthcare downturn came despite the latest ADP private payroll report showing continued gains in education and health services, which added 58,000 jobs. Overall, ADP estimated private employers created 63,000 positions in February.

Industries sensitive to trade policies also faced pressure. Transportation and warehousing payrolls dropped by 11,000 jobs during the month, bringing total losses in the sector to roughly 157,000 compared with a year earlier.

Meanwhile, several major sectors including construction, wholesale trade, retail, and leisure and hospitality showed little change from the previous month.

Although the U.S. Supreme Court struck down certain import duties earlier in February, the administration introduced a new 10% global tariff and has indicated the rate could rise to 15% in the near future.

Fed faces policy dilemma

The weaker employment data arrives just days before the Federal Reserve’s next policy meeting scheduled for March 17–18.

Most economists still expect the central bank to keep its benchmark interest rate unchanged in the current 3.50%–3.75% range. However, the disappointing jobs report has increased market expectations that the Fed could begin cutting rates as early as June.

Financial markets reacted cautiously to the news. The U.S. dollar was largely steady against major currencies, while Treasury yields declined.

According to Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, the latest figures could complicate the Fed’s decision-making process.

A softening labor market would typically strengthen the case for rate cuts. However, policymakers remain wary that persistently high energy prices driven in part by geopolitical tensions could reignite inflation, potentially forcing the Fed to keep policy tighter for longer.

U.S. equities moved lower following the release of the data. By midday trading, the Nasdaq Composite had fallen 0.8%, the S&P 500 declined about 1%, and the Dow Jones Industrial Average dropped 1.1%.

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