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23 April 2024

US economy loses 17,000 jobs in January

By Agencies


The US economy lost 17,000 jobs in January marking a decline in employment for the first time since August 2003, the Labour Department said on Friday in a fresh sign of brewing economic trouble.


The loss of nonfarm jobs caught most economists off guard as many had predicted that employment growth would remain positive in January.


The unemployment rate, based on a separate survey, declined a notch to 4.9 per cent last month compared with 5.0 per cent in December, the Labour Department said.


Most economists had anticipated that the world's biggest economy would create 70,000 new jobs in January. December's job growth was revised significantly higher to show 82,000 new jobs were created compared with an initial estimate of 18,000 positions.


The surprise loss in jobs comes days after the government reported that US economic growth slowed to a 0.6 per cent annualised crawl in the fourth quarter of 2007 from a blistering 4.9 per cent clip in the prior quarter.


The Federal Reserve has launched a rate-cutting drive in a bid to shore up economic growth amid mounting fears that the economy could be falling into a recession. Congress is also debating an economic stimulus plan.


A two-year long housing slump is threatening to derail economic growth and the employment report showed that the housing downturn weighed heavily on the employment market last month.


The report revealed that 28,000 jobs were shed in the construction industry which is laying off workers as home builders cut back on new developments.

The manufacturing industry also fared badly as 28,000 jobs were lost in the sector while professional and business services companies laid off 11,000 employees.


Other industries, which hired workers, offset some of the declines, however.


The education and health services sectors hired 47,000 new workers during the first month of the year while the retail industry added 11,000 new positions.


Average hourly earnings increased 0.2 per cent last month, against analyst expectations that earnings would rise 0.3 per cent.


The job report is likely to trouble the Fed as it suggests some sectors of the economy are in retrenchment despite aggressive moves by the central bank since September to slash borrowing costs.


The Fed cut its key federal funds interest rate by half a percentage point to 3.00 per cent on Wednesday in a bid to underpin economic momentum, eight days after slashing borrowing costs by a historic three quarters of a percentage point. (AFP)