The economy contracted at a 0.4 percent annual rate in the third quarter, the first decline since 1993, as consumer spending cooled and business spending slumped. The drop may signal the start of a recession, which is commonly defined as two straight quarters of contraction.
Manufacturing has led the slowdown with a slump that started in the third quarter of last year. Orders placed with US factories fell in September to the lowest level in 4 1/2 years, the Commerce Department said today. The 5.8 percent decline in bookings to US$313.1 billion was the fifth in the last six months.
"We've actually seen fourth-quarter activity decline slightly," Cutler said.
Before adjusting for seasonal variations, data show private employers have pared 821,000 positions in the last 12 months, more than half of that in the last month. The effect of the terrorist attacks was reflected in job losses at manufacturers, airlines, hotels and restaurants.
Employment at service-producing companies, such as travel-related businesses, plunged 241,000 in October, the largest decline since August 1983 when AT&T Corp workers struck, Labor said. Hotel operators such as Lodgian suffered after the attacks.
The owner or manager of 106 Marriott, Crowne Plaza and other hotels fired employees and reduced hours worked to offset a drop in occupancy rates.
Transportation businesses shed 56,000 jobs. Airlines alone lost 42,000 jobs as American Airlines parent AMR Corp and United Airlines owner UAL Corp began carrying out plans to dismiss 20,000 workers each.
Retailers cut 81,000 jobs, half of those at restaurants and other eating and drinking establishments. Clothing retailers added fewer jobs than usual for the start of the holiday shopping season, the Labor Department said.
Retailers such as Sears, Roebuck & Co and McDonald's Corp are under increased pressure to reduce costs as consumer spending slows. Sears, the biggest US department-store chain, last month said it would cut 4,900 jobs.
McDonald's, the largest US hamburger chain, said it would cut its corporate workforce by about 10 percent, eliminating 500 to 700 jobs, to revive sales and profit.
Factories lost 142,000 jobs in October, the 15th straight drop, after eliminating 90,000 positions in September.
Construction jobs fell 30,000 after rising 1,000 in September.
Workers' average hourly earnings rose 0.1 percent, or US$0.02 after a 0.3 percent increase in September. Micron Technology Inc workers that earn more than US$60,000 a year are taking a 10 percent salary reduction as the company tries to avoid firings.
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