The US economy looks to be headed for a recession.
US employers cut 17,000 non-farm jobs in January, the first time in nearly 4 1/2 years that US payrolls shrank, as continuing losses in construction and manufacturing reflected the economy's waning momentum.
The Labour Department report came in much weaker than anticipated by analysts, who had forecast 80,000
jobs would be added last month.
The department revised December's new-job total up to 82,000 from 18,000 but cut its estimates for hiring in both October and November, highlighting how hiring was already in decline as the year ended.
January marked the first job losses since August 2003, and some analysts said it painted a picture of declining economy.
"We are on the brink of a recession now," said Daniel North, chief economist for Euler Hermes ACI. "The job market is always a lagging indicator. This is a nail-in-coffin."
The report shocked financial markets. The US dollar fell sharply against other major currencies. US equity index futures pared their big earlier gains and US government debt prices cut earlier losses.
The Federal Reserve cut interest rates again last week in a bid to spur the economy, and the Bush Administration and Congress are wrangling over a fiscal stimulus plan to try to get more money into consumers' hands. 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 US interest rates could put further downward pressure on the dollar's value.
- REUTERS
