Unemployment jumps to 7.6 percent; 598,000 jobs are lost in January
WASHINGTON — Recession-battered employers eliminated 598,000 jobs last month, the most since the end of 1974, and catapulted the unemployment rate to 7.6 percent, the Labor Department reported Friday.
Many economists said job losses for this month are likely to be just as bad, and they don’t expect the labor market to return to decent health until 2011 at the earliest.
For January, the net total of job losses was far worse than the 524,000 that economists expected. Job reductions in November and December also were deeper than previously reported.
For all of 2008, the economy lost a net total of 2.9 million jobs, according to revised figures. That marked the biggest annual loss on record and was worse than the 2.6 million initially estimated last month.
With cost-cutting employers in no mood to hire, the unemployment rate bolted to its highest level since September 1992. The increase in the jobless rate from 7.2 percent in December also was worse than the 7.5 percent rate economists expected.
Vanishing jobs and evaporating wealth from tanking home values, 401(k)s and other investments have forced consumers to retrench, which has required companies to pull back. It’s a vicious cycle where the economy’s problems feed on each other, perpetuating a downward spiral.
"Companies are in survival mode and are really cutting to the bone," said economist Ken Mayland, president of ClearView Economics. "They are cutting and cutting hard now out of fear of an uncertain future."
Factories slashed 207,000 jobs in January, the largest one-month drop since October 1982, partly reflecting heavy losses at plants making autos and related parts flexcheck cash advance. Construction companies got rid of 111,000 jobs. Professional and business services chopped 121,000 positions. Retailers eliminated 45,000 jobs. Leisure and hospitality axed 28,000 slots.
Those reductions swamped employment gains in education and health services, as well as in the government.
Employers are slashing payrolls and turning to other ways to cut costs — including trimming workers’ hours, freezing wages or cutting pay. The average work week in January stayed at 33.3 hours, matching the record low set in December.
The number of unemployed workers climbed to 11.6 million. In addition, 7.8 million people were working part time — a category that includes those who would like to work full time but whose hours were cut back, or those who were unable to find full-time work.
If part-time employees, discouraged workers and others are factored in, the unemployment rate would have been 13.9 percent in January, the highest on record.
Job hunters also are facing longer searches for work.
The average time it took for an unemployed person to find any job — full or part time — rose to 19.8 weeks in January, compared with 17.5 weeks a year ago, underscoring the increasing difficulty the out-of-work are having in finding a new job.
Workers with jobs saw modest wage gains.
Average hourly earnings rose to $18.46 in January, up 0.3 percent from the previous month.
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