The U.S. job market has been in a slump over the past year, according to multiple reports. Last year, U.S. employers added an average of just 9,700 jobs a month, the weakest hiring outside a recession since 2002. Data for previous months have been substantially revised downward, with job gains in December 2025 and January 2026 lower than initially estimated, the Labor Department reported. The Bureau of Labor Statistics revised the gain in January 2026 to 126,000 jobs, and the total jobs added in 2025 to 181,000 jobs, making 2025 the weakest year for job growth since the pandemic.
February's losses were widespread, with health care jobs taking a hit thanks to a strike, according to multiple reports. The information sector shed 11,000 jobs, and the federal government cut 10,000 jobs, the Bureau of Labor Statistics said. Federal government employment has dropped by 330,000, or 11%, since October 2024, according to the Labor Department. The social assistance sector added 9,000 jobs, while employment in construction, manufacturing, and trade was little changed.
Well that was ugly. February’s employment data misses the mark across the board.
Wage trends showed mixed signals, with average hourly earnings rising by 0.4% to $37.32 in February. However, a Bank of America Institute report indicated widening disparities, with higher-income wage growth rising to 4.2%, middle-income slowing to 1.2%, and lower-income slowing to 0.6% over the year. This divergence highlights ongoing economic inequality amid the labor market's struggles.
Unemployment metrics painted a concerning picture, with the U-6 unemployment rate rising to 8% from 7.9% in March 2026. The labor force participation rate fell 0.1 percentage point to 61.9% in March, though the number of unemployed decreased by 332,000 to 7.239 million. According to www.usatoday.com, Mark Hamrick described that less immigration and an aging workforce mean fewer new jobs are needed to keep the unemployment rate steady.
What stabilisation? The idea the labor market has turned a corner implodes with this report.
The hiring downturn sent shares on Wall Street lower and raised new pressure on US President Donald Trump, according to research. The Dow Jones industrial index fell 1%, the S&P 500 index fell 1.3%, and the Nasdaq composite index fell 1.6%. White House officials brushed off the significance of the job figures, according to research. According to www.bbc.com, Senator Elizabeth Warren described that they showed the White House was 'tanking the job market'.
The Federal Reserve would typically respond to a weakening labour market by cutting borrowing costs, according to research. The new jobs data will be influential in shaping the US Federal Reserve’s upcoming meeting over interest rates on 17 and 18 March 2026, multiple reports indicate. According to www.usatoday.com, Angelo Kourkafas described that the weak jobs report challenges the recent stabilization narrative and puts the Fed in a difficult position.
They showed the White House was 'tanking the job market'.
Geopolitical tensions have clouded the economic outlook, with the war in Iran escalating, according to multiple reports. The price of oil spiked as the conflict intensified, and the Iran war and resulting surge in oil prices are expected to weaken the U.S. job market, according to Nancy Vanden Houten, lead U.S. economist at Oxford Economics. Last month, US average gas prices broke through $4 a gallon, and the Dow Jones Industrial Average dropped 450 points while Brent Crude oil topped more than $92 a barrel and West Texas Intermediate cracked $90 a barrel.
Economic forecasts have grown more uncertain due to these tensions, with Adam Schickling now expecting U.S. unemployment to rise to 4.6% at year’s end; before the Iran war, he’d expected joblessness to dip to 4.2%. The February 2026 job data does not capture the global shock waves caused by the US-Israel conflict with Iran, multiple reports indicate. The job loss in February came amid concerns that a jump in oil prices sparked by the US-Israel war in Iran could threaten growth, according to research.
There will be so much activity that everybody is going to be able to find a job that wants one.
In the UK, the unemployment rate fell to 4.9% in the three months to February, down from 5.2% in the three months to January, according to the Office for National Statistics. Pay including bonuses rose by 3.8% in the three months to February, with wage growth in the public sector averaging 5.2%, and 3.2% for the private sector, multiple reports indicate. However, the estimated number of job vacancies decreased by 29,000 (3.9%) to 711,000 in January to March, the lowest level since February to April 2021.
The number of workers on payroll remained broadly flat in recent periods, according to ONS Director of Economic Statistics Liz McKeown. The number of people not actively seeking work increased, with fewer students seeking work alongside their studies, multiple reports indicate. Regular wage growth has slowed further with growth at its lowest rate in over five years, McKeown added.
The weak jobs report challenges the recent stabilization narrative and puts the Fed in a difficult position.
Sweden's labor market also showed strain, with unemployment rising to 9.7% in March, according to Statistics Sweden (SCB). The figures for Swedish unemployment are uncertain, and trend-wise unemployment is stagnant, SCB reported. This adds to a broader picture of labor market challenges across advanced economies.
Historical context reveals the severity of recent trends, with the job loss in February 2026 being the biggest monthly loss since October 2025, according to research. From July to December 2025, the U.S. economy lost 45,000 jobs, multiple reports indicate. Hiring in February slowed to a six-year low, with dips in construction and leisure and hospitality, and the 'quits rate' fell to 1.9%, the lowest since 2020.
Economists should avoid over-extrapolating the trend given weather and labor disruptions' potential impact on hiring in February 2026.
Employers announced 217,362 job cuts in the first quarter of 2026 – the lowest total for that period since 2022, according to outplacement firm Challenger, Gray & Christmas. This suggests that while layoffs are not surging, hiring has stagnated significantly. The February job loss was below forecasters' expectations, adding to the surprise of the downturn.
Inflation trends have been volatile, with US inflation dipping to 2.3% in April 2025 before jumping to 3% in September, multiple reports indicate. Price increases have been steady at 2.4% since the start of this year. This persistent inflation complicates the Federal Reserve's policy decisions amid a weakening labor market.
With global geopolitical uncertainty elevated, it is reasonable to expect that job growth may remain subdued in the months ahead.
Revisions to previous job figures have raised questions about data reliability, with total employment in January and February 2026 being 7,000 lower than previously reported, according to multiple reports. According to The Guardian - World, Dean Baker described that the labor market was slowly deteriorating by a number of measures through 2025. He added that the January 2026 report was at least a partial reversal of these trends, but this reversal is not showing up in other data sources, like unemployment filings or Indeed’s job listings.
According to The Guardian - World, Dean Baker described that while it may be the case that the labor market is actually improving, it is also possible that the improvement was driven in part by better than usual January weather. According to www.usatoday.com, Angelo Kourkafas described that economists should avoid over-extrapolating the trend given weather and labor disruptions' potential impact on hiring in February 2026. With global geopolitical uncertainty elevated, it is reasonable to expect that job growth may remain subdued in the months ahead, Kourkafas added.
Less immigration and an aging workforce mean fewer new jobs are needed to keep the unemployment rate steady.
According to www.bbc.com, Samuel Tombs described that the idea the labor market has turned a corner implodes with this report. According to www.bbc.com, Kevin Hassett described that there will be so much activity that everybody is going to be able to find a job that wants one. These conflicting views underscore the uncertainty surrounding the labor market's trajectory.
The specific factors most responsible for the U.S. job losses beyond strikes and geopolitical issues remain unclear, and how the Federal Reserve will adjust interest rates in response to mixed data and tensions is yet to be determined. The full economic impact of the Iran war on global markets and job growth beyond oil price spikes is also uncertain, as are the revised total job figures for 2025 and early 2026 after all data revisions are accounted for.
The labor market was slowly deteriorating by a number of measures through 2025.
The January 2026 report was at least a partial reversal of these trends.
This reversal is not showing up in other data sources, like unemployment filings or Indeed’s job listings.
While it may be the case that the labor market is actually improving, it is also possible that the improvement was driven in part by better than usual January weather.