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By Bob Willis~Bloomberg
The U.S. unemployment rate surged in February to the highest level in more than 25 years and the economy lost more than 600,000 jobs for a third consecutive month, pointing to further reductions in spending.
Payrolls fell by 651,000 and revisions for the prior two months lopped off an additional 161,000 jobs, the Labor Department said today in Washington. The jobless rate surged to 8.1 percent, more than forecast and the highest since December 1983.
Tumbling demand globally is prompting companies from General Motors Corp. to Sears Holdings Corp. to step up firings, perpetuating a vicious circle of job losses and spending cuts. The Obama administration has set aside immediate concerns about a budget gap and pushed through a $787 billion stimulus plan aimed at creating or saving 3.5 million jobs.
“There is not a single sign that points to a bottom yet,” Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “It is the worst recession in the postwar era.”
The payroll drop in January was revised up to 655,000 from 598,000 and December now shows a 681,000 drop, up from the 577,000 previously estimated. The December decline was the biggest since October 1949.
The U.S. economy has now lost almost 4.4 million jobs since the recession began in December 2007, the biggest employment slump of any economic downturn in the postwar period.
Payrolls were forecast to drop by 650,000, according to the median of 80 economists surveyed by Bloomberg News. Estimates ranged from losses of 500,000 to 800,000.
Factory Jobs
The jobless rate was projected to jump to 7.9 percent. Forecasts ranged from 7.8 percent to 8.1 percent.
Today’s report showed factory payrolls fell by 168,000 after declining 257,000 in the prior month. Economists forecast a drop of 200,000. The decrease included a loss of 25,300 jobs in producers of machinery and 27,500 in makers of fabricated metal products.
Automakers, at the heart of the manufacturing slump, continued to slash jobs and trim costs to stay in business. General Motors last month said it would cut 47,000 more positions globally while Chrysler LLC announced 3,000 more layoffs.
Auto-parts makers are also suffering. Canton, Ohio-based Timken Co., the supplier of bearings to the world’s top five carmakers, said March 2 it would eliminate as many as 400 salaried jobs this year.
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