Another blow to US economy, unexpectedly sheds 17,000 jobs

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.

“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.

Just last month, the December report showed an anaemic 18,000 rise in payrolls, prompting a downturn in stock market that led to one of Wall Street’s worst January performances ever. On Friday, the Labour Department raised that estimate to a gain of 82,000 jobs.

The unemployment rate in January fell back slightly, to 4.9 per cent, after jumping to 5 per cent in December. But that was one of few strong spots in the report. Payrolls at private companies increased by a mere 1,000 jobs. Businesses are reducing the number of hours that their employees work. And workers' salaries have effectively fallen in the last 12 months. The average hourly wage for rank-and-file workers — about 80 percent of the total work force — rose 3.7 percent since last January. Average hourly earnings ticked up 0.2 percent last month, slowing from a 0.4 percent rise in December.

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