The number of jobs in the US economy fell last month in an unexpected contraction that has renewed questions about whether the labour market in the United States might be starting to weaken according to BBC.
Payrolls in the US dropped by 92,000 and the unemployment rate rose to 4.4%, according to the latest official figures, surprising analysts who had expected hiring to remain stable.
It marked the biggest monthly job loss since October, when the US government shut down, and came amid concerns that a jump in oil prices sparked by the US-Israel war involving Iran could threaten economic growth.
Nearly every sector shed jobs, including healthcare – typically a source of strength – which was affected by strikes last month.
Employment in the federal government also continued to fall, declining by 10,000 last month. Since reaching a peak in October 2024, federal government employment has dropped by 330,000, or 11%, the United States Department of Labor said.
The department also reported that job gains in December and January were lower than initially estimated.
Even if healthcare employment rebounds as expected, the figures have dented hopes that hiring might begin to accelerate after the slowdown in 2025, which was the weakest year for job growth since the pandemic, according to Samuel Tombs, chief US economist for Pantheon Macroeconomics.
“What stabilisation?” he wrote in a note after the figures were released. “The idea the labor market has turned a corner implodes with this report.”
The downturn in hiring pushed shares on Wall Street lower and increased pressure on US President Donald Trump, who campaigned on promises to strengthen the economy.
Democrats quickly seized on the figures, with Senator Elizabeth Warren saying they showed that the White House was “tanking the job market”, while officials in the administration dismissed their significance.
In an interview with CNBC, Kevin Hassett, director of the National Economic Council, said he still expected strong economic growth to drive job creation in the coming months.
“There will be so much activity that everybody is going to be able to find a job that wants one,” he said.
The report also complicates the decisions facing the US central bank.
The Federal Reserve would typically respond to a weakening labour market by cutting borrowing costs in an effort to stimulate the economy.
However, analysts said the risk that a sustained rise in oil prices could push inflation higher may cause policymakers to hesitate.
“Today’s numbers may have put the Fed between a rock and a hard place,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.