Everbright Securities has released a research report analyzing the US nonfarm payroll data for February 2026, published by the Department of Labor on March 6, 2026. The data showed a loss of 92,000 nonfarm jobs, significantly missing the consensus forecast of a 59,000 gain. The previous month's figure was revised down to 126,000 from 130,000. The unemployment rate rose to 4.4%, higher than the expected 4.3%, while average hourly earnings increased by 3.8% year-over-year, slightly above the 3.7% forecast.
From the perspective of interest rate cuts, the Federal Reserve currently faces a trade-off between economic stagnation and inflationary pressures, creating short-term uncertainty for monetary easing. However, a continued deterioration in the labor market could potentially act as a constraining variable on US-Iran tensions. Following the jobs report, Federal Reserve officials expressed concern over the employment data. Nonetheless, inflation expectations fueled by rising oil prices may also limit the scope for future rate cuts. Given domestic economic constraints, there is a possibility that the Trump administration may seek a swift resolution to de-escalate Middle East tensions, thereby creating policy room for the Fed to resume rate cuts by mid-year.
Key viewpoints from Everbright Securities are as follows:
The unexpectedly weak February nonfarm payrolls can be attributed to temporary disruptions, including strikes in the healthcare sector and adverse weather conditions. Healthcare employment was a major drag, primarily due to strikes at Kaiser Permanente in California and Hawaii. Additionally, a winter storm that swept across the Northeastern US at the end of February led to emergency declarations in seven states, including New York and New Jersey, likely impacting employment in construction and in-person service industries. While the February weakness had specific disruptive causes, the renewed escalation of Middle East tensions and rapidly rising oil prices pose risks of further deterioration in future employment data.
Nonfarm payrolls fell more than anticipated, with weakness evident in both goods-producing and service-providing sectors. 1. Education and Health Services: The healthcare sector lost 19,000 jobs in February, a sharp contrast to the gain of 116,000 in the previous month, largely due to strike activity and serving as the primary drag on the overall figure. 2. In-Person Services and Construction: The February winter storm negatively impacted sectors such as construction (a loss of 11,000 jobs), leisure and hospitality (a loss of 27,000 jobs), and transportation and warehousing (a loss of 11,000 jobs).
The labor force participation rate declined to 62.0% from 62.1%, indicating lower employment willingness among the prime-age population. The number of unemployed persons increased by 209,000, driving the U-3 unemployment rate (unemployed/labor force) up to 4.4%. Structurally, the number of persons on temporary layoff increased significantly (up 79,000, reversing a previous decrease of 83,000), potentially reflecting reduced business demand for labor, while the number of permanent job losers saw a modest increase (up 30,000, compared to a previous increase of 38,000).
According to the CME FedWatch Tool, following the jobs report, market expectations shifted to pricing in a single rate cut for 2026, most likely in September with a 42.3% probability. The probability of the Fed holding rates steady in March 2026 stands at 95.5%.
Risk warnings include a sharper-than-expected slowdown in the US economy, escalating international trade frictions, and unforeseen developments in geopolitical situations.