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The contraction came as a surprise with payrolls down in nearly every sector.
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Payrolls in the US dropped by 92,000 and the unemployment rate ticked up to 4.4%, according to the latest official figures, surprising analysts who had expected hiring to remain stable.
It marked the biggest monthly job loss since October, when the US government shut down, and came amid concerns that a jump in oil prices sparked by the US-Israel war in Iran could threaten growth.
Nearly every sector shed jobs including healthcare, typically a source of strength, which was hit by strikes last month.
Employment in the federal government also continued to drop, shrinking by 10,000 last month. Since hitting a peak in October 2024, federal government employment has dropped by 330,000, or 11%, the Labor Department said.
It also said job gains in December and January were lower than initially estimated.
Even if healthcare employment bounces back as expected, the figures dented hopes that hiring might be starting to accelerate after the 2025 slowdown, which was the weakest year for jobs since the pandemic, said Samuel Tombs, chief US economist for Pantheon Macroeconomics.
"What stabilisation?" he wrote in a note after the figures were published. "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, who campaigned on promises of improving the economy.
Democrats quickly seized on the figures, with Senator Elizabeth Warren saying they showed that White House was "tanking the job market", while White House officials brushed off their significance.
In an interview with CNBC, Kevin Hassett, director of the National Economic Council, said he still expected strong growth to power job creation in the months ahead.
"There will be so much activity that everybody is going to be able to find a job that wants one," he said.
The report also complicates the questions facing the US central bank.
The Federal Reserve w
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