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 per cent, according to a Labor Department report yesterday 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 per cent.
President Barack Obama seized on the dire US jobs news to attack “distraction and delay” in the US Congress over a stimulus plan to boost the US economy.
The president said: “It is inexcusable and irresponsible to get bogged down in distraction and delay while millions of Americans are being put out of work.”
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.
“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. Economists said the figures showed the US economy was sinking at least as quickly as the worst recessions since the second World War.
“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 US economic research for Global Insight in Lexington, Massachusetts. “Hopefully it will concentrate some minds in the Senate so they can come to an agreement .”
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 labour market plunge.
Financial markets reacted calmly, with US stock indices in positive territory by midday. The yield on the two-year treasury note was little changed at 0.9 per cent, while the yield on the 10-year treasury note was three basis points higher at 2.943 per cent. – (Financial Times service/Reuters)
