U.S. lost 63,000 jobs in February
NEW YORK: The economy unexpectedly shed 63,000 jobs in February, the government said Friday, fueling fears of a recession as manufacturers and construction companies cut their work forces amid the continuing housing crisis.
It was the fastest falloff in the labor market in five years, and the report raised anticipation on Wall Street that the Federal Reserve would lower interest rates again this month. Some investors are now predicting a more drastic cut of a full percentage point.
Stock markets dropped after the opening bell but had recovered by 10:30 a.m., with the main indexes on Wall Street fluctuating in and out of negative territory. The Dow Jones industrials fell slightly while the Nasdaq composite showed modest gains as investors weighed the bad economic news with the prospect of lower interest rates.
Stocks sold off Thursday because of a new round of problems in the credit market, and before the jobs report was released, the Fed announced that it would increase the amount of money available through its new auction program, in a move to ease the flow of credit between banks, businesses, and consumers. The Fed will release $100 billion in additional capital as part of its effort to make it easier for banks to borrow money from the government without the traditional stigma.
But the focus Friday was squarely on the jobs report, which revealed widespread cracks in the U.S. labor market.
“I havent seen a job report this recessionary since the last recession,” said Jared Bernstein, an economist at the Economic Policy Institute in Washington. “This is a picture of a labor market becoming clearly infected by the contagion from the rest of the economy.”
Many economists had predicted a slight increase; instead, February marked the second straight monthly decline in the labor market. The government also revised down its estimate for January to a loss of 22,000 jobs - the first decline in four years - and cut in half its estimate for job growth in December.
The private sector lost 101,000 jobs last month, the biggest dropoff in five years. Retail stores shed 34,000 jobs, while the manufacturing sector lost 52,000 workers and construction firm payrolls shrank by 39,000 jobs.
Would-be workers are also feeling more discouraged. Fewer Americans looked for work in February, and the size of the overall U.S. labor force declined. Those developments sent the unemployment rate down to 4.8 percent last month from 4.9 percent in January.
Wages grew more slowly, further depressing the outlook for consumer spending over the next few months. Among rank-and-file workers - more than 80 percent of the workforce - average pay grew just 0.3 percent to $17.20 an hour. Wages are effectively running flat when adjusted for inflation.
