The economy lost 17,000 jobs in January, the US Labor Department reported on Friday, the first monthly decline in four years and the most striking evidence yet that the US may be slipping into a recession.

Until now, the labour market had been growing at a steady pace. Many economists pointed to expanding payrolls as the final holdout in a sluggish economy weighed down by trouble on Wall Street, the collapse of the housing bubble, and a cascade of credit problems linked to soured subprime mortgages.

But, January employment report cast the job market in a startlingly darker light. Jobs disappeared across a broad spectrum of professions, with the steepest losses coming in manufacturing, construction and goods-producing industries.

Adding to the gloom, the government said that the level of employment was sharply lower in December than it had originally estimated. The new figure was based on an annual review of every job covered by unemployment insurance.

“This is the clearest signal yet that the job market is either in or teetering on a recession,” said Jared Bernstein, senior economist at the liberal Economic Policy Institute in Washington.

The decline, the first since August 2003, caught economists by surprise. Forecasters had predicted a substantial gain in January payrolls, and early signs pointed to a relatively strong report. President Bush used the report to urge Congress to quickly pass a proposed fiscal stimulus package.

“There are certainly some troubling signs, serious signs that the economy is weakening, and we've got to do something about it,” he said. Bush said he was confident of the economy's fundamental strength but that the employment report showed reasons for concern. “I think government can take decisive action to help us deal with this period of uncertainty,” he said.

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