The Tri-Cities region added jobs on paper in February, but a state government seasonal spike masked underlying private-sector softness. The bottom line is the private sector labor market gave back modest ground from January.
The regional unemployment rate increased to 4.1%. The increase was driven by a 5% rate in Johnson Co. and a 5.1% rate in Greene Co. The Johnson City-Kingsport-Bristol rate was 3.9%, up from 3.7% in Jan.
Health care, professional services, and financial activities remain the region’s most durable employment drivers heading into spring. The more consequential data test will come in March, when seasonal adjustments normalize and the labor market’s underlying momentum comes into clearer focus.
The region’s private sector employment last month was 180,100 jobs, down 500 from this time last year.
There were 39,700 seasonally adjusted jobs in the goods production sector, down 200 from last year.
The service sector had 175,300 seasonally adjusted jobs, down 100 from last year.
Unadjusted Bureau of Labor Statistics (BLS) data show total nonfarm employment rose by roughly 1,100 jobs between January and February. The headline gain, however, is almost entirely a product of a seasonal surge in state government payrolls that is a pattern driven by Tennessee’s recurring academic and administrative hiring calendar.
Private Sector: Net Loss of 300 Jobs
Excluding government, the private sector shed approximately 300 jobs between January and February
The directional picture is consistent with typical post-January cooling in goods-moving and consumer-facing sectors, while knowledge-economy and health-anchored employment continued to provide a floor.
Government: The Distortion in the Data
The government sector warrants a separate accounting. Unadjusted BLS figures show total government employment jumped from 33,500 in January to 34,900 in February — a raw gain of 1,400 jobs. State government drove nearly all of that, rising from 8,400 to 9,500, a surge of 1,100 positions. Local government added a more moderate 200 jobs (21,100 to 21,300), and federal government added 100 (4,000 to 4,100).
The state-level spike is a well-documented seasonal artifact. When adjusted for that seasonal pattern, state government employment reflects a loss of approximately 700 jobs – a swing of roughly 1,800 positions from the unadjusted figure. The seasonally adjusted picture aligns with broader national trends: federal employment continues to contract, and state budgetary pressures are translating into headcount reductions rather than growth.
Combined with the private-sector loss of 300 jobs, the seasonally adjusted employment picture for February is a net decline of approximately 1,000 jobs across all sectors, a materially different read than the unadjusted total suggests.
Tri-Cities Diverges From a Troubled U.S. Jobs Report
The Tri-Cities’ private-sector softness in February was not unusual against the national backdrop, but the region’s profile differed in important ways. Nationally, the U.S. economy shed 92,000 nonfarm payroll jobs on a seasonally adjusted basis, the largest monthly loss in four months. The BLS subsequently revised that figure to a loss of 133,000, reflecting additional data. The national decline was broad-based, with particular weakness in health care alongside losses in information, federal government, transportation, and manufacturing.
The Tri-Cities did not mirror the health care drag. Private Education and Health Services was one of the region’s three growth sectors last month. It continues as one of the market’s most reliable employment anchors. That divergence reflects the region’s concentration of hospital systems and outpatient services that were not affected by the work stoppages that disrupted national figures.
Where the region did track national trends was in Transportation and Utilities. It posted the largest single-sector decline locally (-300 jobs). That’s consistent with the national pullback in that sector. Federal government contraction, a consistent national theme since late 2024, also registered locally, and the broader federal employment trajectory continues to present a structural headwind.
Methodology & Attribution
Data: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES), unadjusted nonfarm payroll employment. Government totals reflect unadjusted BLS figures; seasonally adjusted government estimate reflects Tennessee state seasonal pattern adjustment. National figures reflect BLS seasonally adjusted establishment survey data, subsequently revised in the March 2026 Employment Situation release. Sector employment figures in thousands.
This report is combination of human and AI analysis.
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