US Feb payrolls drop biggest in nearly five years

U.S. employers cut payrolls for a second straight month during February, slashing 63,000 jobs for the biggest monthly decline in nearly five years as the nation’s labour markets weakened steadily.

The Labour Department said last month’s cut followed an upwardly revised loss of 22,000 jobs in January rather than the 17,000 reported a month ago. It also said only 41,000 jobs were created in December, half the 82,000 originally reported.

“This confirms the fears that have been lurking in the financial markets in recent weeks. The probability of a U.S. recession is at more than 50 percent,” said Richard DeKaser, chief economist for National City Corp. in Cleveland.

“The Fed has to be more aggressive,” DeKaser added. The U.S. central bank is expected to cut interest rates again later this month and, on Friday just before the payrolls report became public, announced new measures to add liquidity to severely strained credit markets that are near seizing up. U.S. Treasury debt prices shot up in anticipation that the Fed will cut interest rates.

The back-to-back January and February job losses were the first consecutive monthly declines since May and June of 2003. The February jobs report was more bleak than expected. Economists surveyed by Reuters forecast 25,000 jobs would be added to payrolls last month. They had forecast that the unemployment rate would edge up to 5.0 percent.

Department officials said February’s job losses were the largest for any month since March 2003, when 212,000 jobs were cut.

During February, the national unemployment rate eased to 4.8 percent from 4.9 percent in January, but that was because fewer people were in the labour force. The department said the number of people in the workforce fell by 450,000 in February.

In a statement issued with the monthly jobs data, the commissioner of the Labour department’s bureau of labor statistics, Keith Hall, warned that many of this year’s job losses may take a long time to come back.