US job losses in February were the biggest and most widespread since the aftermath of the September 11th terrorist attacks of 2001, according to an official report yesterday.
Non-farm payrolls shrank by a seasonally adjusted 308,000 - the biggest loss since November 2001, according to the Labor Department.
It was the third time in four months there had been a contraction.
"The labour market crashed in February," said Ms Sophia Koropeckyj, an analyst with Economy.com.
"With companies struggling with profitability, rising energy and other commodity prices, a sinking equities market, weak order growth, shaky credit quality and uncertain future demand, they are in no position to resume hiring."
The report said the unemployment rate, based on a separate survey of households, rose slightly, to 5.8 per cent from 5.7 per cent.
Analysts who had expected little or no change in payrolls described yesterday's report as alarming and astonishing.
But economic data had turned sour over the past month, and demand for unemployment benefits, reported weekly, had been rising over the past seven weeks at the fastest pace in a year.
Yesterday's report, which also showed the average unemployment spell had jumped to a near decade-high of 18.6 weeks, put new pressure on the Federal Reserve to consider interest rate cuts and on Congress to negotiate a compromise stimulus plan.
The Bush administration leapt on the report to urge congressional passage of its $795 billion (€720 billion) stimulus plan, which has been criticised by Democrats and some Republicans as unfair, ineffective and too costly.
Economists caution employment is a lagging indicator of the economy's direction.
Significant job losses occurred in the recovery from the 1990-91 recession which eventually gave way to one of the nation's strongest expansions.
However, job losses during this "recovery" dwarf in both size and duration losses seen in most previous post-recession periods.
Traders have been speculating on or hedging against the possibility that the US economy remains fundamentally sick and that its weakness could extend beyond recent bad weather, military-reserve call-ups, fears of terror or the resolution of the Iraq dispute and that this will eventually force the Fed's hand. - (Financial Times Service)
