Economy: 17,000 jobs cut in January

Job losses were widespread in various parts of the
economy.

WASHINGTON (AP) — Nervous employers cut 17,000 jobs in January — the first such reduction in more than four years and a fresh sign that the economy is in danger of stalling.

The Labor Department’s report, released Friday, also showed that the unemployment rate dipped slightly to 4.9 percent, from 5 percent, as the civilian labor force shrank slightly.

Job losses were widespread. Manufacturers, construction firms and a variety of professional and business services eliminated jobs in January — reflecting the toll of the housing and credit debacles. The government cut jobs, too. All those cuts swamped job gains in education, health care, retailing and elsewhere.

Wage growth also slowed, another indication that employers are tightening their belts amid the economic slowdown.

Pointing to the drop in jobs, President Bush prodded Congress to quickly pass an economic rescue package. The president said there are “serious signs that the economy is weakening, and we’ve got to do something about it.”

The unemployment rate declined from 5 percent in December to 4.9 percent in January. The jobless rate — calculated from a different statistical survey than the payroll figures — dipped as people, perhaps discouraged by their prospects, left the labor force for any number of reasons.

Taken together, the figures suggested that employers have grown cautious as they try to cope with fallout from housing and credit problems and rising worry about the ailing economy.

“It’s a weak report. It tells us the probability of a recession is rising, but we don’t know if we are there yet,” said Joel Naroff, president of Naroff Economics Advisors.

The mind-set of business people is one of some fear and uncertainty about the economy’s direction, he said. “They are thinking if there is some capital spending I should postpone for a while, I should do that. If there is some hiring I don’t necessarily need to do right now, I can put that off for a few months to see what happens,” Naroff said. “The problem with that thinking is that more economic weakness or a recession can become somewhat of a self-fulfilling prophecy.”

To help ease the credit crisis, the Federal Reserve announced Friday that it will provide squeezed banks with an additional $60 billion in short-term loans through auctions Feb. 11 and Feb. 25. The Fed started the auctions in December and since then has already provided a total of $100 billion in loans to banks.