By Pierce Oel A. Montalvo, Researcher

THE unemployment rate fell to a two-month low of 5.1% in February, reflecting the seasonal first-quarter trend of workers re-entering the labor market, the Philippine Statistics Authority (PSA) said on Thursday.

Citing preliminary data from the Labor Force Survey, the PSA said the jobless rate was down from the 5.8% rate posted a month earlier but exceeded the 3.8% reading in the same period last year.

February unemployment was the lowest  since the 4.4% reported in December. This was equivalent to 2.66 million jobless in February.

National Statistician Claire Dennis S. Mapa said that the increase in the labor force caused unemployment to inch down on a month-on-month basis, as more applicants found work during the period.

“For the first two months, our average is at 51.49 million versus 50.87 million. So, it’s roughly 600,000. There’s an increase if you’re talking about the first two months of 2026, compared to the first two months of 2025,” Mr. Mapa said at a briefing.

A total of 52.09 million workers aged 15 and up were in the labor force during the month, against the 51.09 million a year earlier and the 50.89 million a month earlier.

This translates to a labor force participation rate of 63.8%, lower than the 64.5% posted in February 2025 but higher than the 62.3% million in January.

“February historically sees labor market re-entry as Q1 economic activity resumes — early construction projects, inter-island trade, and government disbursements pick up,” Leonardo A. Lanzona, an economics professor at Ateneo de Manila, said via chat.

He added that the headline jobless rate should be read cautiously with respect to job quality.

The underemployment rate — the share of workers with jobs but are seeking more hours — was at 11.8%, up from the 10.1% in the same month last year, but lower than the 13.2% in the previous month.

“Notably, the underemployment rate in January stood at 13.2%… suggesting that part of the February improvement may reflect people moving from ‘unemployed’ to ‘underemployed’ rather than securing full, quality employment,” Mr. Lanzona added.

About 5.84 million individuals were considered underemployed in February 2026, higher than the 4.96 million a year earlier, but lower than the 6.35 million in January 2026.

The employment rate was 94.9%, lower than the 96.2% posted in February 2025, but higher than the 94.2% in January.

Jobholders numbered 49.43 million during the month, higher than the year-earlier 49.16 million and the 47.94 million in January.

Year on year, the wholesale and retail trade lost 725,000 jobs, the most among subsectors during the month, ahead of agriculture and forestry (-523,000) and construction (-484,000).

Benjamin B. Velasco, an assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations, said the decline in agriculture and construction is a result of the headwinds posed by climate change and the flood control corruption scandal.

He added that the rise in unemployment in wholesale and retail is “worrying,” given how it typically absorbs workers easily.

“If Filipinos are unable to find livelihood in a sub-sector with low barriers to entry, then it is a symptom of economic malaise,” Mr. Velasco said via chat.

The administrative and support activities subsector meanwhile led all sectors in job growth, adding 572,000 jobs, followed by transportation and storage (486,000) and accommodation and food service activities (357,000).

Month on month, public administration and defense lost 336,000 jobs in February, followed by professional, scientific and technical activities (-97,000) and administrative and support activities (-69,000).

On the other hand, wholesale and retail trade gained 658,000 jobs, with agriculture and forestry (380,000) and accommodation and food service activities (361,000) close behind.

63.8% of the employed are wage and salary workers, followed by the self-employed without paid employees (27.4%). Among wage and salary workers, 50.1% were employed by private establishments, while the government employed 8.9%.

“The labor market has begun to show early signs of weakness at the start of 2026, reflecting the lingering effects of last year’s economic slowdown,” Chinabank Research said in a research note.

It added that the impact of the recent oil price shock has yet to be captured, with conditions expected to deteriorate from March onward as transport and logistic workers remain vulnerable to the effects of the Persian Gulf conflict.

Any oil price drops in the wake of the recent two-week ceasefire declared by the US could alleviate job losses.

“If this price decline persists, alongside a strengthening peso, domestic pump prices could ease as well, providing some relief to business and consumers alike.”

Mr. Velasco said the impact of the US-Israel war on Iran will be a crucial factor in employment challenges in the next few months.

“For example, jeepney drivers and operators may stop working which will have multiplier effects on street vendors and small shops which cater to them.”

However, he said that a crisis can be turned into an opportunity.

Meanwhile, Josua T. Mata, secretary-general of Sentro ng mga Nagkakaisa at Progresibong Manggagawa, said via Viber that the conflict could have direct consequences to the job economy, “even if the ceasefire holds.”

“Today’s crisis makes such action not just necessary, but urgent — an essential pillar of any serious economic response. Yet the government continues to stonewall. “

Economy Secretary Arsenio M. Balisacan said that the conflict will continue to affect global economic conditions and disrupt labor markets.

He said “recent developments highlight the urgency to strengthen the resilience of our labor market.”

“We must ensure that our policies and programs respond effectively to rapidly changing global conditions, especially for affected and displaced Filipino workers here and abroad,” Mr. Balisacan said.

Mr. Lanzona said that in the following months, unemployment could drift to the 7-9% range, “above the post-pandemic recovery floor of roughly 5%.”

“For context, even at the height of COVID lockdowns in February 2021, unemployment stood at 8.8%, or 4.2 million people. The current external shock would have to escalate substantially beyond its present state to reach even that level.”