Nearly 600,000 Jobs Lost As Unemployment Hits 7.6%

US employers slashed 598,000 jobs in January, the deepest cut in payrolls in 34 years and the jobless rate shot up to 7.6 percent, according to a Labor Department report Friday that underlined a deepening recession.

January's job losses were worse than the 525,000 that had been forecast by Wall Street economists, who also had expected the unemployment rate to come in lower at 7.5 percent.

AP

The bleak data is certain to be cited by the Obama administration as a fresh reason for Congress to speed up debate over economic stimulus proposals that could cost $800 billion or more.

Last month's job reductions were the largest since 602,000 in December 1974, while the jobless rate reached its highest level in more than 16 years.

"The economy is just falling into oblivion and it will get worse," said Greg Salvaggio, vice-president for trading at Tempus Consulting in Washington, shortly after the jobs report was issued.

Others agreed, saying it intensifies pressure for the government to try something to prop up the economy.

"These are huge, huge declines, said Nigel Gault, director of U.S. economic research for Global Insight in Lexington, Mass. "Hopefully it will concentrate some minds in the Senate so they can come to an agreement (on a stimulus package)."

Stocks opened higher after the data boosted expectations for passage of the stimulus package. Long-dated U.S. government debt prices extended losses on concern that the government will have to borrow huge amounts to finance any stimulus measures.

Labor officials said job losses were gaining momentum.

"January's sharp drop in employment brings job losses to 3.6 million since the start of the recession in December 2007," Commissioner of Labor Statistics Keith Hall said in a statement, and "about half the decline occurred in the last three months." January's losses followed upwardly revised cuts of 577,000 in December and 597,000 in November.

The manufacturing sector bled jobs at the sharpest rate during January in more than 26 years, shedding 207,000 workers after cutting 162,000 in December. The last time more factory jobs were lost in a single month was in October 1982 when 221,000 were cut.

(Watch the accompanying video for more on the numbers...)

An index measuring total paid hours for factory workers dropped to its lowest level since 1940, department officials said. Construction industries dropped 111,000 jobs in January after 86,000 in December and Hall said that pace of cuts was accelerating.

Retail businesses cut another 45,000 positions after shedding 82,700 in December. There were 121,000 job losses among professional and business services providers in January on top of 106,000 that were eliminated in December. Only education and health services added jobs as did the government.

Analysts said there was no sign of relief on the horizon, judging from the depth and breadth of January's labor market plunge.

"It is just another confirmation that were are in a deep and long recession, and the bottom is not even in sight," said Robert MacIntosh, chief economist for Eaton Vance Management in Boston. "Manufacturing is incredibly weak—it's going to be a long haul."

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