Payrolls Plunged 308,000 in February
Friday March 7, 9:00 am ET
By Caren Bohan
WASHINGTON (Reuters) - The number of workers on U.S. payrolls plunged in February at the sharpest rate since November 2001 and the jobless rate rose to 5.8 percent, the government said on Friday in a shockingly gloomy economic report.
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The Labor Department said payroll jobs outside the farm sector declined by 308,000 last month -- in contrast to expectations in a Reuters poll that they would rise by 8,000. Payrolls had risen by 185,000 in January, a number that was revised up from the originally reported 143,000 gain.
Some special factors, such as snowstorms, might have been at play in the report, a government statistician said.
The jobless rate climbed one-tenth of a percentage point from January's 5.7 percent.
The data sent the U.S. dollar spiraling to new four-year lows against the euro. Bond prices surged and stock futures skidded lower.
Pierre Ellis, economist with Decision Economics in New York, called the payrolls figure "a catastrophically weak number."
"Barring some fluke element to it, which does not seem apparent, the Fed is going to have think very seriously about cutting interest rates," Ellis added.
"This kind of job loss translates into potential serious damage to consumer spending. A decline in consumer spending would put the economy into double-dip recession very quickly," he said.
WAR JITTERS GROWING
The grim report comes amid growing uncertainty about the economy's health at a time when many analysts believe uncertainty stemming from the threat of war with Iraq is leading to reluctance among employers to hire.
A Labor Department analyst told Reuters in an interview that special factors such as huge winter storms on the East Coast might have contributed to the February job declines, but he could not quantify the impact.
Another factor at play might have been the calling up of military reservists as a potential war with Iraq looms, said Tom Nardone, a Labor Department statistician.
Although the consensus forecast of economists had projected a slight rise in payrolls in February, several analysts had been revising their forecasts in recent days to anticipate a possible decline after a raft of downbeat signals, including a spike in applications for jobless claims.
February's job losses were widely distributed across industries. Job losses in the retail sector were especially steep, falling 92,000. Manufacturing jobs dropped 53,000 and construction jobs tumbled 48,000.
In an unusual development that was at odds with signs of weakness elsewhere in the jobs report, average hourly earnings rose by 0.7 percent to $15.08 after a 0.1 percent drop in January.
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