Surge in Job Cuts Fuels Worries About Recession
U.S. employers cut payrolls for a second straight month during February, slashing 63,000 jobs for the biggest monthly decline in nearly five years as the nation's labor markets weakened steadily, a government report on Friday showed.
The Labor Department said last month's cut followed an upwardly revised loss of 22,000 jobs in January rather than the 17,000 reported a month ago. It also said only 41,000 jobs were
created in December, half the 82,000 originally reported.
"This confirms the fears that have been lurking in the financial markets in recent weeks. The probability of a U.S. recession is at more than 50 percent," said Richard DeKaser, chief economist for National City Corp. in Cleveland.
"The Fed has to be more aggressive," DeKaser added. The U.S. central bank is expected to cut interest rates again later this month and, on Friday just before the payrolls report became public, announced new measures to add liquidity to severely strained credit markets that are near seizing up.
The back-to-back January and February job losses were the first consecutive monthly declines since May and June of 2003.
The February jobs report was more bleak than expected. Economists surveyed by Reuters forecast 25,000 jobs would be added to payrolls last month. They had forecast that the
unemployment rate would edge up to 5.0 percent.
Department officials said February's job losses were the largest for any month since March 2003, when 212,000 jobs were cut.
During February, the national unemployment rate eased to 4.8 percent from 4.9 percent in January, but that was because fewer people were in the labor force. The department said the
number of people in the workforce fell by 450,000 in February.
Job losses were widespread. Some 52,000 jobs were lost in the manufacturing industries, the largest decline since July 2003 when 92,000 jobs were cut. Construction businesses
eliminated another 39,000 jobs on top of 25,000 that were cut in January, a reflection of the housing industry's deepening woes.
The department said that since the housing boom peaked in September 2006, construction businesses have cut 331,000 jobs.
Retail industries also shed jobs last month, dropping 34,000 people off their payrolls, a possible reflection of concern from businesses that hard-pressed consumers are likely to begin pulling back sharply on spending.
In a statement issued with the monthly jobs data, the commissioner of the Labor department's bureau of labor statistics, Keith Hall, warned that many of this year's job losses may take a long time to come back.
"The increase in unemployment over the past 12 months was concentrated among persons who lost jobs and had no expectation of being recalled," Hall said in remarks prepared for delivery
to Congress' Joint Economic Committee.
One bright spot was that the government added 38,000 jobs in February on top of 4,000 new-hires in January. Education and health services businesses added 30,000 new hires in February
on top of 49,000 in January.