US records unexpected drop in job numbers

(Patria) - The number of jobs in the US economy fell last month. This unexpected decrease has reopened the question of whether the US labor market is showing signs of weakening.

According to the latest official data, employment decreased by 92,000, while the unemployment rate rose to 4.4%. Analysts had expected employment to remain stable.

This is the largest monthly drop in employment since October, when the US federal government was shut down, and it comes at a time of growing concern that a surge in oil prices, fueled by the US and Israeli war against Iran, could threaten economic growth.

Almost all sectors lost jobs, including healthcare, which is usually one of the more stable sectors, but was affected by strikes last month.

A drop in employment was also recorded in the federal government, where the number of jobs decreased by 10,000 last month.

The Department of Labor stated that from its peak in October 2024, the number of federal government employees has fallen by 330,000 jobs, or 11%.

The Department also announced that the data on employment growth in December and January were lower than initially estimated.

Samuel Tombs, chief US economist at Pantheon Macroeconomics, emphasized that such data diminishes hopes that employment could begin to accelerate after a slowdown in 2025, which was the weakest year for the labor market since the pandemic.

- What stabilization? The idea that the labor market has turned a new leaf is falling apart with this report - Tombs stated.

The drop in employment lowered stock prices on Wall Street and increased political pressure on US President Donald Trump, who had promised to strengthen the economy during his campaign.

Democrats quickly reacted to the published data. Senator Elizabeth Warren said the numbers show the White House is "destroying the labor market," while administration officials downplayed the report's significance.

In an interview with CNBC, Director of the National Economic Council Kevin Hassett stated that he still expects strong economic growth that will boost employment in the coming months.

- There will be so much economic activity that everyone who wants a job will be able to find one - Hassett stated.

The new report further complicates the decisions facing the US central bank. It typically responds to a weakening labor market by lowering interest rates to stimulate the economy.

However, analysts warn that a sustained rise in oil prices could fuel inflation, which could force policymakers to be cautious.

- Today's numbers may have put the Fed between two bad options - said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.