U.S. unemployment hits 8.1% as 651,000 jobs lost
The battered U.S. economy continued to bleed jobs at a rapid rate in February, as employers cut 651,000 workers from their payrolls, the U.S. Department of Labour reported Friday.
The big job losses pushed the U.S. unemployment rate up to 8.1 per cent — the highest since late 1983 — from 7.6 per cent in January. Roughly 12.5 million Americans were out of work in February.
Economists had been predicting a total of 648,000 jobs lost last month. February's job losses follow an even bigger employment drop of 655,000 in January and 681,000 in December — both of those monthly figures having been revised downward from earlier estimates.
"I think we're going to continue to see these kinds of numbers, or worse, as the economy looks for a bottom," said Paul Thornton, an investment adviser with Global Maxfin Capital. "So I would not be surprised to see jobless numbers in the U.S. at nine per cent or higher before it finally bottoms out."
Speaking in Columbus, Ohio, U.S. President Barack Obama said the latest job losses bring the total to "an astounding 4.4 million" over the course of the current recession.
'Worst is not over'
"It is useful to remember that the unemployment rate peaked at or above nine per cent in two of the major recessions in the post-war era — the 1974 recession and the 1982 recession," said Charmaine Buskas, senior economics strategist at TD Securities.
"The worst is not over for the job market losses, so there is clearly scope for more furrowed brows. As such, it remains a matter of waiting out the worst of the storm, and we continue to debate whether the unemployment rate will eventually hit double digits," Buskas said.
U.S. employers in most sectors of the economy slashed their payrolls, with 104,000 jobs lost in construction, 168,000 cut in manufacturing and 40,000 eliminated in the retail sector.
The professional and business services sector chopped 180,000 workers, including 78,000 jobs lost at temporary-help agencies. Financial services firms eliminated 44,000 jobs, while the leisure and hospitality sector saw 33,000 jobs lost.
The only employment increases were seen in education and health services, and government.
In addition to slashing their payrolls, employers have also cut back sharply on the number of hours their staff members are working.
Part-time work increasing
The U.S. government said the number of persons who worked part time for economic reasons, sometimes referred to as involuntary part-time workers, rose by 787,000 in February, reaching 8.6 million. The total number of such workers has gone up by 3.7 million over the past 12 months.
The category includes employees who would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs, the Labour Department said.
The U.S. economy contracted at an annualized pace of 6.2 per cent in the final three months of 2008, with economists predicting a negative first half of 2009.
Earlier this week, U.S. Federal Reserve chairman Ben Bernanke told Congress that recent economic indicators "show little sign of improvement" and he suggested that "labour market conditions may have worsened further in recent weeks."
The Canadian unemployment rate for January stood at 7.2 per cent, after the economy lost 129,000 jobs that month. February jobless figures for Canada are to be released March 13 at 7 a.m. ET.
Speaking in Toronto on Friday, Finance Minister Jim Flaherty said the government was "hopeful that the moves being made by President Obama and his new administration in terms of stimulus and other steps … will rejuvenate the American economy."