Brink of a Recession
The soft jobs numbers convinced some analysts that the economy already was in deep trouble. "We are on the brink of a recession now," said Daniel North, chief economist for Euler Hermes ACI in Owings Mill, Maryland. "The job market is always a lagging indicator. This is a nail-in-the-coffin."The Fed cut interest rates again this week in a bid to spur the economy and the Bush administration and Congress are wrangling over the fiscal stimulus plan. But analysts said more policy action may be necessary to try to avert a stall. Boris Schlossberg, chief currency strategist for DailyFX.com in New York, said the jobs total "shows that the economy is at a virtual standstill." "It is very negative from a long-term perspective because clearly the Fed is going to have to continue cutting rates," Schlossberg added. Lower U.S. interest rates could put further downward pressure on the dollar's value. Manufacturers cut 28,000 jobs in January, a 19th straight month of contraction for the sector, while the number of construction jobs dropped by 27,000. The Labor Department said construction industries have shed 284,000 jobs since employment peaked in September 2006, largely reflecting the continuing decline in home building. A separate report from the Commerce Department showed, not surprisingly, that construction spending dropped 1.1 percent in December, partly because of a fall-off in home construction. Sales, construction and prices of both new and previously owned homes are in sharp decline with no early end in sight. The job report showed that after holding steady for six months, the average workweek fell to 33.7 hours in January from 33.8 in December, another sign of weakening in labor markets. The private sector added 1,000 jobs in January but 18,000 government jobs were lost. (By Glenn Somerville, Editing by Neil Stempleman) ??« Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
The national unemployment rate eased to 4.9 percent from 5 percent in December. The unemployment rate is calculated using a separate survey than the one the department uses for measuring the number of payroll jobs each month.