Now, here’s our labor market insights for February 2026, written by Matt Duffy:
I appreciate feedback – good, bad, or ugly. Usually. But never from my wife about how to wash the dishes. Specifically, whether the dishwasher should be loaded logically or “creatively” (the dishwasher is my canvas, and the dishes are my paintbrush!). In that particular debate, I explained that I wasn’t being defensive about feedback – I was just aggressively committed to explaining why I was right. (She was right.)
Recently, I’ve received a fair amount of feedback about the tone of my labor market reports. A few highlights – (1) “Why are you so negative all the time?”; (2) “You’re only focusing on troubling indicators and ignoring positive momentum”; (3) “How confident are you in your data, are government sources really the right source of truth?”; and my personal favorite, (4) “Try writing one of these without the whiskey.”
My responses, in order: (1) fair point; (2) I’ll try to do better; (3); I’m quite confident; and (4) not a chance.
In hindsight, my last couple of reports have leaned negative. To be fair, there are legitimate headwinds we’re navigating (if you need a refresher, see Labor Market Insights | January 2026 ). That said, there are also real, grounded reasons why optimism about the labor market isn’t just wishful thinking.
We tend to view the labor market in binary terms – it’s either strengthening or weakening. But sometimes it’s doing neither. Occasionally, it simply rotates. Today, we’re in a period of rotation. And that requires us to rethink some of our assumptions about how the labor market behaves.
As you read the following, view each point through the lens of rotation. This isn’t a short-term cycle. It’s structural.
- Every cycle creates new winners
Demographics alone create long-term worker shortages in various sectors. AI, healthcare, clean energy, infrastructure, data, cybersecurity – entire categories are expanding even while others slow. Labor markets don’t shrink evenly; they rotate.
- Economic “cooling” isn’t the same as a crash
What we’re seeing looks more like normalization after an overheated period, not a free-fall. Historically, markets like this reward patience, upskilling, and smart moves rather than panic. The labor market is in a period of rotation. Rotations – or slowdowns – reset valuations, open competitive spaces, and reward skill upgrading. Many people build their strongest career momentum coming out of uncertain periods.
- Hiring is still happening – just more selectively
We’re not in a hiring freeze so much as a rotation. Companies are being more deliberate, which actually favors candidates with clear skills, experience, or a strong story. Fewer “spray and pray” postings, more real roles tied to actual business needs. Yes, job postings are down significantly, but the good news is that we’re seeing fewer “bogus” job postings.
- Unemployment is still low
Even with headlines about layoffs, the overall unemployment rate remains low by long-term standards. That means demand for workers hasn’t collapsed – it’s shifted. Employers still compete for talent in many roles, particularly in emerging sectors – Data Centers, IT Security, and many blue-collar roles. Also, unemployment has dropped for two consecutive months.
- Wage growth hasn’t disappeared
Wages are still rising, especially for people who switch jobs or bring in-demand skills. It’s not the frenzy of 2021–22, but compensation is holding up better than in past slowdowns.
- Skills > pedigree more than ever
This is a big one. Employers are increasingly valuing what you can do over where you went to school or how linear your resume looks. Certifications, hands-on experience, and transferable skills matter more, which opens doors for a lot of people.
- People are still quitting (by choice)
Voluntary quits are still happening, which is a quiet signal of confidence. People don’t leave jobs unless they believe they have options – or at least leverage. Granted, the quit rate is much lower than previous years; however, the current rate signals movement – while it’s decelerated, it’s still encouraging.
By the Numbers:
- New Jobs – the U.S. added 130,000 new jobs in January
- 51,000 jobs shy of the entirety of the jobs created in 2025, and the strongest month of job creation since December 2024
- Health care and social assistance once again saw the biggest gains, with ~ 120,000 jobs added
- Many other sectors, notably government (-42,000 jobs), either shed jobs or reported very weak gains
- Unemployment fell for the second straight month to 4.3%
- The decline was due in part to adjustments applied by the BLS, so take the decline with a grain of salt
- Job openings dropped – somewhat significantly – to 6.5 million, down from 7.6 million just a few months ago.
- Declines in job openings have been especially severe in a few sectors over the past couple of months, including financial activities (-25.1%) and professional & business services (-21.8%)
- Hires increased slightly to 5.3 million, up from 5.1 million the previous month
- The hiring rate continues to remain stuck at levels last seen in 2013, when the U.S. economy was still emerging from the Great Recession
- Layoffs increased slightly to 1.8 million, up from 1.7 million
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- The layoff rate has dropped back to 1.1%, the same rate as the fall of 2025
- Quits remained unchanged at 3.2 million
- Quits, which are seen as a measure of worker confidence in the ability to change jobs and find another one continues to remain very steady
- Total separations increased slightly to 5.3 million, up from 5.1 last month
- The number of total separations decreased in professional and business services (-212,000) and in private educational services (-20,000).
- Total separations increased in transportation, warehousing, and utilities (+110,000) and in federal government (+10,000).
- Jobs per available worker dropped to 0.87:1, down from 0.99:1 the previous month
- At its peak in 2022, the ratio was 2:1
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