Research
March 06, 2026
Total U.S. jobs
A disappointing decline in jobs in the U.S. economy in February
Nonfarm payrolls fell by 92,000 in February, a disappointing result given expectations for a net gain of 50,000 jobs. Adding to that weakness, employment in December and January was revised down by a combined 69,000 positions. Overall, the data point to a softer‑than‑desired labor market—one that has seesawed between monthly gains and losses since May 2025. Through the first two months of 2026, the economy has added only 34,000 jobs on net, following the modest increase of just 116,000 positions for all of 2025.
The recent softening in labor market conditions could challenge the prevailing narrative of post‑pandemic economic resilience. Steady employment and wage growth have been essential drivers of consumer spending, and any sustained weakness could weigh on economic activity.
Restaurant operators are closely monitoring these labor trends as they work to drive traffic and sales against a backdrop of softer demand. While there are positive indicators that could support solid performance for the sector this year, risks remain, including a cooling labor market and heightened geopolitical uncertainties, among other factors.
For the Federal Reserve, the slowdown in job growth may strengthen the case for those advocating rate cuts to support economic momentum. At the same time, a still‑resilient broader economy and elevated cost pressures stemming from geopolitical events in the Middle East could complicate that outlook. Taken together, the data suggest that monetary policymakers will likely maintain a wait‑and‑see stance in the near term as they assess additional incoming indicators.
The unemployment rate inched up from 4.3% in January to 4.4% in February. That has been the average since August. The number of unemployed individuals increased from 7.37 million in January to 7.57 million in February.
At the same time, the labor force participation rate edged down from a revised 62.1% in January to 62.0% in February, the lowest since December 2021. This suggests a sizable percentage of possible employees have moved to the sidelines of the labor market, which is a challenge.
At the same time, average hourly earnings for private‑sector production and nonsupervisory workers rose 0.3% for the second straight month to $32.03 in February, up 3.7% from a year earlier. This matched the year‑over‑year pace in January and remained the slowest since May 2021. This is evidence of continued moderation, though at a still‑solid rate of wage growth. Labor cost pressures have eased markedly from their peaks of 7.8% in April 2020, in the immediate aftermath of the pandemic, and 7.0% in January and March 2022.
Job growth in February was largely negative. There was higher employment for financial activities, other services, and state government, but other sectors experienced declines. There were notable decreases in private education and health services, leisure and hospitality (including eating and drinking places), manufacturing, information, and construction, among others. Interestingly, some of those sectors are ones that have outperformed in recent months. Below is a detailed breakdown of February’s employment changes by sector, ranked from highest to lowest:
The recent softening in labor market conditions could challenge the prevailing narrative of post‑pandemic economic resilience. Steady employment and wage growth have been essential drivers of consumer spending, and any sustained weakness could weigh on economic activity.
Restaurant operators are closely monitoring these labor trends as they work to drive traffic and sales against a backdrop of softer demand. While there are positive indicators that could support solid performance for the sector this year, risks remain, including a cooling labor market and heightened geopolitical uncertainties, among other factors.
For the Federal Reserve, the slowdown in job growth may strengthen the case for those advocating rate cuts to support economic momentum. At the same time, a still‑resilient broader economy and elevated cost pressures stemming from geopolitical events in the Middle East could complicate that outlook. Taken together, the data suggest that monetary policymakers will likely maintain a wait‑and‑see stance in the near term as they assess additional incoming indicators.
The unemployment rate inched up from 4.3% in January to 4.4% in February. That has been the average since August. The number of unemployed individuals increased from 7.37 million in January to 7.57 million in February.
At the same time, the labor force participation rate edged down from a revised 62.1% in January to 62.0% in February, the lowest since December 2021. This suggests a sizable percentage of possible employees have moved to the sidelines of the labor market, which is a challenge.
At the same time, average hourly earnings for private‑sector production and nonsupervisory workers rose 0.3% for the second straight month to $32.03 in February, up 3.7% from a year earlier. This matched the year‑over‑year pace in January and remained the slowest since May 2021. This is evidence of continued moderation, though at a still‑solid rate of wage growth. Labor cost pressures have eased markedly from their peaks of 7.8% in April 2020, in the immediate aftermath of the pandemic, and 7.0% in January and March 2022.
Job growth in February was largely negative. There was higher employment for financial activities, other services, and state government, but other sectors experienced declines. There were notable decreases in private education and health services, leisure and hospitality (including eating and drinking places), manufacturing, information, and construction, among others. Interestingly, some of those sectors are ones that have outperformed in recent months. Below is a detailed breakdown of February’s employment changes by sector, ranked from highest to lowest:
- Financial activities: +10,000
- Other services: +8,000
- State government: +5,000
- Local government: -1,000
- Mining and logging: -2,000
- Trade, transportation, and utilities: -2,000 (retail trade: +2,300)
- Professional and business services: -5,000
- Federal government: -10,000
- Construction: -11,000
- Information: -11,000
- Manufacturing: -12,000
- Leisure and hospitality: -27,000 (eating and drinking places: -29,700)
- Private education and health services: -34,000