Finance & Business World

WASHINGTON–Recession-battered employers in the United States eliminated 598,000 jobs in January, the most since the end of 1974, catapulting the unemployment rate to 7.6 per cent. The grim figures were further proof the country’s job climate is deteriorating at an alarming clip with no end in sight.

The labour department report released yesterday showed the terrible toll the drawn-out recession is having on workers and companies. It also puts even more pressure on Congress and President Barack Obama’s administration to revive the economy through a stimulus package that tops $900 billion (U.S.) and a revamped financial bailout plan, both of which are nearing completion.

The economy has lost 3.6 million jobs since the recession began in December 2007, with about half occurring in the past three months.

"These numbers demand action. It is inexcusable and irresponsible to get bogged down in distraction and delay while millions of Americans are being put out of work. It is time for Congress to act," Obama said bluntly. "That’s 3.6 million Americans who need our help.”

The latest net total of job losses was far worse than the 524,000 economists expected. Job reductions in November and December also were deeper than previously reported.

The unemployment rate bolted to 7.6 per cent in January, the highest since September 1992. The increase in the jobless rate from 7.2 per cent in December also was worse than the 7.5 per cent rate economists expected.

Vanishing jobs and evaporating wealth from tanking home values, retirement funds and other investments have forced consumers to retrench and required companies to pull back. It’s a vicious cycle as 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 cash advance to savings account. "They are cutting and cutting hard now out of fear of an uncertain future.”

If discouraged workers and others are factored in, the jobless rate would have been 13.9 per cent in January, the highest on record.

But on Wall Street, investors pushed up stock prices on hopes the dismal jobs report would get Congress to move quickly on the economic revival package. The Dow Jones industrials gained more than 217 points yesterday and broader stock indicators also rose.

Factories slashed 207,000 jobs in January, the largest one-month drop since October 1982, partly reflecting heavy losses at auto and parts plants. 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 jobs.

Those cuts 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 – to cope with shrinking appetites from customers in the U.S. and overseas, who are struggling with their own economic woes.

The number of unemployed workers climbed to 11.6 million. Job hunters also are facing longer searches for work.

The average time it took for an unemployed person to find a job rose to 19.8 weeks in January, compared with 17.5 weeks a year ago, underscoring the increasing difficulty the jobless are having in finding a new position.

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