New York, February 6: Employers in the US slashed 598,000 jobs in January, the deepest cut in pay-rolls in 34 years. The Labor Department reported a 7.6 percent spurt in unemployment, underlining a deepening recession.
The latest job reduction was the worst since Dec. 1974. It brought the total to 1.8 million in just the last three months, touching the highest level in 16 years. January’s job cuts were worse than the 525,000 predicted by Wall Street economists.
These are huge declines with people struggling for jobs. More than 2.6 million people have now been out of work for more than six months, the longest unemployment scenario since 1983.
Greg Salvaggio, vice president for trading Tempus Consulting in Washington stated that “The economy is just falling into oblivion and it will get worse.”
The bleak picture shall intensify pressure for the government to try and speed up stimulus proposals to prop up the economy.
Sen. Edward Kennedy stated “Today’s job numbers confirm that the economy remains in free-fall, with disastrous consequences for America’s workers. We need strong measures to put people back to work and support for those who can’t find a job.”
Sung Won Sohn, economics professor at Cal State University said "Hiring is falling off dramatically and layoffs are accelerating. The layoffs have become an almost popular thing to do for corporations. Many businesses are scared. They want to take precautionary steps."
Virtually every sector is shedding jobs. The manufacturing sector bled jobs at the sharpest rate during January in more than 26 years. Almost 207,000 more workers were laid off after slashing 162,000 jobs in December. The construction industry dropped 111,000 jobs, and the services sector, which provides more than two-thirds of the nation's employment base, also reported widespread losses.
Business and professional services, the sector that includes lawyers, accountants and tech services lost 121,000 jobs. Retailers cut 45,000 workers, while the finance sector eliminated 42,000 workers. Even the leisure and hospitality sector lost 28,000 jobs. Only the education and health services added narrow gains in jobs as did the government.
Analysts believe there is no sign of relief on the horizon judging from the depth and breadth of January’s labor market plunge. It is going to be a long haul with the bottom not even in sight.
Brian Bethune, chief U.S. financial economist for research firm Global Insight, said there is a need for programs that get money into the economy as quickly as possible.
According to him "Business confidence is extremely weak right now. They've taken a show-me-the-money attitude. What you need to stop more job losses is a series of very effective policies. That's the only thing that will help here."
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