The US lost 308,000 jobs last month, the most since the aftermath of the 2001 terrorist attacks, prompting some economists to predict the Federal Reserve will cut interest rates as soon as this month.
The unemployment rate rose to 5.8 percent from 5.7 percent in January, nearing an eight-year high, and hours worked fell, the Labor Department said.
The plunge in payrolls was the most since November 2001 and was four times the lowest prediction in a Bloomberg News economist poll.
Seven of the nine major industries tracked by the government shed workers. JP Morgan Chase & Co and Merrill Lynch & Co predicted the Federal Reserve will cut its benchmark rate by a quarter-point to 1 percent, the lowest since July 1958.
The report "was frighteningly weak, thereby raising the possibility of a double-dip recession," said David Rosenberg, chief North American economist for Merrill Lynch. He put odds of a recession at about 50 percent.
While some economists say a recession that started in March 2001 probably ended later that year, the private economists group that dates business cycles has never called an official end.
The report adds evidence that Congress should pass President George W. Bush's tax-cut plan, Treasury Secretary John Snow said.
Senate Democratic leader Tom Daschle said Bush has turned the economy into a "job-destroying machine" and "simply does not know what it takes to get our economy moving again."
Job creation is at the heart of household spending, which accounts for more than two-thirds of the economy, and 366,000 positions have been eliminated in the last six months.
The decline in payrolls was the biggest since November 2001, when airlines and other companies shed jobs after the Sept. 11 attacks.
Economists had expected payrolls to rise by 10,000 last month following an increase of 185,000 in January, based on the median of 65 forecasts in a Bloomberg News survey. No economist expected payrolls to decline by more than 75,000. Snowstorms along the East Coast, a terrorist alert and reservists called for armed services duty in the Middle East may have also depressed payrolls, economists said.
Dead in the water
"This is an indication of an economy that is close to dead in the water," said Peter Hooper, chief US economist at Deutsche Bank Securities, who had forecast a 75,000 decline in payrolls.
"It's going to continue to look weak until geopolitical uncertainties are resolved."
Employment in service-producing industries, which include retailers, banks and government agencies, plunged by 204,000 last month, the biggest decline since November 2001, after rising 166,000 the previous month. Retailers dropped 92,000 positions, and other services such as restaurants and building maintenance lost 86,000.
Construction employment fell by 48,000 in February after rising 26,000 a month earlier.
Manufacturers eliminated jobs for the 31st straight month.
Factories dropped 53,000 jobs last month, after cutting 4,000 the month before. The manufacturing workweek held at 40.8 hours, and overtime rose to 4.2 hours from 4.1 hours.
The payroll total may have been depressed by the activation of civilian workers for military duty. The US ordered 91,358 reservists to mobilize from mid-January to mid-February, accounting for more than half of the 150,252 called up by Feb. 12, the week when the Labor Department conducted its payroll poll.
The government instructed companies to exclude from their payroll counts workers called up to serve in the armed forces because they are no longer in the civilian labor force.
Companies reluctant to invest in new plants and equipment until executives know more about how a war will affect the economy, and for how long.
Federal Reserve Chairman Alan Greenspan has said the economy may grow faster when the conflict with Iraq are resolved.
The president understands that the standoff is creating some major uncertainties in the economy, White House spokesman Ari Fleischer said today. At a news conference last night, Bush said the US is prepared if necessary to use force to disarm Iraq.
"The price of doing nothing exceeds the price of taking action if we have to," Bush said last night.
The worst Northeast snow storm in seven years may have led to a drop in hours worked. Average weekly hours worked declined to 34.1 from 34.3 in January, today's report showed.
Economists had expected hours would hold steady at the previously reported 34.2 hours, the Bloomberg survey found.
The Labor Department also said the percentage of the US population holding jobs held at 63.2 percent in February.
The number of discouraged workers, those no longer looking for work because they thought no jobs would be available and who therefore weren't counted as unemployed, rose to 450,000 last month compared with 375,000 in February 2002. The number of discouraged workers isn't adjusted for seasonal factors.
Taiwan’s foreign exchange reserves fell below the US$600 billion mark at the end of last month, with the central bank reporting a total of US$596.89 billion — a decline of US$8.6 billion from February — ending a three-month streak of increases. The central bank attributed the drop to a combination of factors such as outflows by foreign institutional investors, currency fluctuations and its own market interventions. “The large-scale outflows disrupted the balance of supply and demand in the foreign exchange market, prompting the central bank to intervene repeatedly by selling US dollars to stabilize the local currency,” Department of Foreign
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
RSS