U.S. Jobs Fell Unexpectedly By 17,000 During January
U.S. employers cut 17,000 non-farm jobs in January, the first time in nearly 4-1/2 years that U.S. payrolls shrank as continuing losses in construction and manufacturing reflected the economy's waning momentum.
The Labor Department report Friday came in much weaker than anticipated by analysts surveyed by Reuters, who had forecast 80,000 jobs would be added last month.
The department revised December's new-job total up to 82,000 from 18,000 but cut its estimates for hiring in both October and November, highlighting how hiring was already in decline as 2007 ended.
January marked the first job losses since August 2003 and some analysts said it painted a picture of declining economy.
"We are on the brink of a recession now," said Daniel North, chief economist for Euler Hermes ACI in Owings Mill, Maryland. "The job market is always a lagging indicator. This is a nail-in-coffin."
The national unemployment rate eased to 4.9 percent from 5 percent in December. The unemployment rate is calculated using a separate survey than the one the department uses for measuring the number of payroll jobs added or subtracted each month.
The Federal Reserve cut interest rates again this week in a bid to spur the economy and the Bush administration and Congress are wrangling over a fiscal stimulus plan to try to get more money into consumers' hands. But analysts said more policy action may be necessary to try to avert a stall.
Boris Schlossberg, chief currency strategist for DailyFX.com in New York, said the jobs total "shows that the economy is at a virtual stand still."
"It is very negative from a long-term perspective because clearly the Fed is going to have to continue cutting rates," Schlossberg added. Lower U.S. interest rates could put further downward pressure on the dollar's value.
Manufacturers cut 28,000 jobs in January, a 19th straight month of contraction for the sector, while the number of construction jobs dropped by 27,000. The department said construction industries have shed 284,000 jobs since employment peaked in September 2006, largely reflecting the continuing decline in home building.
After holding steady for six months, the average workweek fell to 33.7 hours in January from 33.8 in December, another sign of potential weakening in labor markets.
The private sector added 1,000 jobs in January but 18,000 government jobs were lost.