The US unemployment rate hit a 25-year high of 8.1% in February as employers buckling under the strain of a recession that shows no sign of ending axed 651,000 jobs, government data showed on Friday.
Adding to the gloom, a combined 161,000 more jobs were lost in January and December than previously believed. February’s decline in non-farm payrolls was close to economists’ forecast for a 648,000 drop. “It just continues to show the grim state of the labor market, which suggests a deepening US recession,” said Joe Manimbo, a currency trader at Ruesch International in Washington.
US equity index futures rose on relief the number was not worse than market expectations, and US Treasury debt prices turned lower after the data. The dollar fell against the euro. The Labor Department said the unemployment rate in February was the highest level since December 1983, and it was above market forecasts for a rise to 7.9 from January’s 7.6%.
January’s job cuts were revised to show a steep decline of 655,000, while December’s payrolls losses were adjusted to 681,000, the deepest since October 1949. Since the start of the recession in December 2007, the economy has purged 4.4 million jobs, with more than half occurring in the last 4 months. Job losses in February were broad based, with only government, education and health services adding jobs.
“Since the recession began, the rise in unemployment has been concentrated among people who lost jobs, as opposed to job leavers or people joining the labor force,” said Bureau of Labor Statistics Commissioner Keith Hall
The manufacturing sector shed 168,000 jobs in February, after eliminating 257,000 positions the prior month. Construction industries bled 104,000 jobs in February after losing 118,000 in January. The service-providing industry slashed 375,000 positions after shedding 276,000 in January.
Companies struggling with falling revenues and tight profit margins are slashing jobs in huge numbers, a step that is forcing households to further scale back spending, creating a vicious cycle for the withering economy.
In January, the length of the workweek was steady at 33.3 hours, matching a record low registered in December. The factory workweek fell to 39.6 hours. Weekly overtime hours at factories slipped to 2.6 hours in February from 2.8 hours in January. Average hourly earnings inched up to $18.47 from $18.44 in January.
Data showed on Thursday showed non-farm productivity, a measure of output per worker hour, fell at a 0.4% annual rate in the Q4, indicating that the job cuts by companies were insufficient and more would have to be implemented to match the slump in demand.
The government is rolling out a $787 billion stimulus package to try and break the economy’s alarming downward spiral. But the success of this plan depends on stabilizing the fractured financial system and collapsed housing market (Reuters)