A “Now Hiring” sign is seen at an AutoZone on Feb. 11, 2026 in Hollywood, Florida.
Joe Raedle | Getty Images
The 2025 labor market has been generously described as “unstable,” with virtually no jobs growth and a slew of headwinds expected to conspire against it. In 2026, though, the buzzword seems to be “stable,” even though conditions seem to be largely the same.
The picture continues to be of a low-hire, low-fire climate, where companies are both reticent to lay off employees as demand continues to be strong, but also are leery of adding staff amid uncertainty over tariffs, inflation and geopolitics.
However, characterizations coming from Federal Reserve officials and market economists have grown at least a bit more optimistic — stressing the stability, if not the robustness, of the labor market.
The difference between this year and last? Expectations.
A prevailing belief is that with the clampdown on immigration and other factors holding back labor pool growth, a subdued hiring rate is fine — at least for now — and the current pace of job growth is adequate and even expected.
“We’ve actually been getting signs of the U.S. labor market showing some stability,” Claudia Sahm, chief economist at New Century Advisors, said in a recent CNBC interview. Sahm, author of the oft-cited “Sahm Rule” that uses changes in the unemployment rate to forecast recessions, added that there’s a need to “be very watchful” as “the fact that the hiring rate is so low does make us vulnerable.”
“We’ve actually got some good news as we came into the year in the labor market. But we do need to see the hiring rate pick up,” she added. “That has been kind of a mystery, how low hiring is given the fact that the U.S. economy is expanding.”
More clues on where the employment picture is headed will come Friday when the Bureau of Labor Statistics releases its monthly nonfarm payrolls report for February at 8:30 a.m. ET.
Economists surveyed by Dow Jones expect payroll growth of 50,000, following January’s surprisingly high 130,000. The unemployment rate is expected to hold at 4.3%, another sign of that, yes, stable labor market that certainly isn’t going gangbusters but is just strong enough to keep that jobless level steady.
How stable?
However, the so-called stability may not be all it appears.
Most of the payroll gains in 2025 came from health-care-related industries. Without the sector, even the meager 15,000 monthly average gains last year would have evaporated, and this year’s environment looks largely the same to those on the ground.
“One of the things that is very interesting-slash-potentially problematic is that we have almost all the growth happening in this health care and social [assistance]” sectors, said Laura Ullrich, director of economic research at Indeed. “I don’t really see it as balanced or stable if you’re seeing so much growth in just one subsector.”‘
For January, the two sectors accounted for practically all the gains, with health care contributing 82,000 jobs and social assistance adding 42,000. By contrast, construction lost 88,000 in 2025, despite President Donald Trump’s tariffs aimed at stimulating the sector.
Technology-related fields also have been under pressure with the accelerated adoption of artificial intelligence. Block co-founder and CEO Jack Dorsey rattled the labor market last week when announcing the firm would be slashing about 40% of its payroll in response to AI.
For February specifically, the BLS report could be pressured by a since-resolved strike at Kaiser Permanente, a development that could hit the health-care numbers as it impacted 31,000 workers in California and Hawaii. Though the impasse ended Feb. 23, the strike occurred during the survey week the BLS uses to compute the report.
Bank of America is forecasting a below-consensus gain of 35,000 in payrolls because of the strike, though the firm said the unemployment rate may not be impacted.
