The U.S. economy suffered 17,000 job losses in January marking the first monthly losses since 2003, a government snapshot showed Feb. 1 in a fresh sign of brewing economic trouble. The surprise loss in nonfarm payrolls caught most economists off guard as many had predicted that employment growth would continue in January. Economists had anticipated that the world's biggest economy would create 70,000 new jobs in January, but the Labor Department said payrolls fell for the first time since August 2003.
Manufacturing lost 28,000 jobs while 27,000 jobs were shed in the construction industry in January. Professional and business services companies laid off 11,000 white-collar employees.
"We should expect to see more bad news on the labor market, at least through the middle of the year, before the heavy doses of monetary and fiscal stimulus begin to kick in," said Nigel Gault, an economist at Global Insight.
The national unemployment rate, based on a separate survey, declined slightly to 4.9% last month compared with 5% in December. Economists said this was partly because fewer people were seeking work.
"Overall this report has a feeling that the job cycle is in danger of weakening further and even though the unemployment rate decline was welcome, it unfortunately has the look of a down blip in a rising trend so unemployment is still likely to trend up over time," said Ian Morris, a chief U.S. economist at HSBC North America. "Ultimately, it means the Fed has got to keep cutting rates," Morris said.
Some industries hired new employees last month, however. The education and health services sectors hired 47,000 new workers during the first month of the year while the retail industry added 11,000 new positions.
Average hourly earnings increased 0.2% last month to $17.75, against analyst expectations that earnings would rise 0.3%.
Copyright Agence France-Presse, 2008