The government instructed companies to exclude from their payroll counts workers called up to serve in the armed forces because they are no longer in the civilian labor force.
Companies reluctant to invest in new plants and equipment until executives know more about how a war will affect the economy, and for how long.
Federal Reserve Chairman Alan Greenspan has said the economy may grow faster when the conflict with Iraq are resolved.
The president understands that the standoff is creating some major uncertainties in the economy, White House spokesman Ari Fleischer said today. At a news conference last night, Bush said the US is prepared if necessary to use force to disarm Iraq.
"The price of doing nothing exceeds the price of taking action if we have to," Bush said last night.
The worst Northeast snow storm in seven years may have led to a drop in hours worked. Average weekly hours worked declined to 34.1 from 34.3 in January, today's report showed.
Economists had expected hours would hold steady at the previously reported 34.2 hours, the Bloomberg survey found.
The Labor Department also said the percentage of the US population holding jobs held at 63.2 percent in February.
The number of discouraged workers, those no longer looking for work because they thought no jobs would be available and who therefore weren't counted as unemployed, rose to 450,000 last month compared with 375,000 in February 2002. The number of discouraged workers isn't adjusted for seasonal factors.
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