U.S. unemployment hits 7.6 pct, 598,000 jobs lost
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U.S. unemployment surged in January to 7.6 percent, the highest since 1992, as 598,000 jobes were cut, the Labor Department reported Friday.
The number of job losses for the recession-hobbled economy was the worst since 1974, according to the monthly Labor Department report on nonfarm payrolls, seen as one of the best indicators of economic momentum.
The department also revised up its estimate of December job losses to 577,000 from 524,000.
Payroll employment has declined by 3.6 million since the start of the recession in December 2007, with around one-half of the decline in the past three months.
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"The expectations were for a disastrous January for the labor market, and the preliminary numbers exceeded these expectations," said Sophia Koropeckyj at Economy.com.
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Ian Shepherdson, chief US economist at High Frequency Economics, called the data "another horrific report, showing job losses across the economy."
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"If ever there were an economy in need of stimulus, this is it," he said.
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The report comes with the U.S. Congress debating a massive stimulus to revive an economy reeling from a housing collapse that spread to the financial and manaufacturing sectors and has dented consumer confidence and spending, the main driver of economic activity.
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President Barack Obamas administration is also expected to announce a new effort to stabilize banks in an effort to ease a crippling credit crunch and get credit flowing again.
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The recession deepened in the fourth quarter with an annualized decline in activity of 3.8 percent, yet some analysts say the first quarter of 2009 could be even worse.
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"This report only established the urgency to pass whatever stimulus package and (bank) rescue package comes next week," said Jon Ogg at 24/7 Wall Street.
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"This is going to get worse. Much worse. President Obama has already warned in many of his speeches that millions of more jobs will be lost."
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The report showed 11.6 million unemployed people in the labor force, which was reduced by over 700,000 people who stopped searching for work.
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Manufacturing shed 207,000 jobs in January, the largest one-month decline since October 1982.
In other sectors, construction lost 111,000 jobs and the retail sector shed 45,000. The financial sector axed 42,000 over the month and by 388,000 since a peak in December 2006.
Health care and government were among the few sectors showing gains.
But the service sector overall, which represents about 85 percent of nonfarm employment, lost 279,000 jobs in the month, with the goods-producing sectors losing 319,000.