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U.S. Loses Jobs For First Time In Five Years
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The number of administrative and support jobs fell by 21,500, for example, and the number of state government education jobs was off by 26,000, which could either be evidence of lower property tax revenue related to the housing slump or a quirk in the way the government adjusts for seasonal ups and downs. The leisure and hospitality sector, which includes hotels and restaurants, added 19,000 jobs, down from the average 30,000 a month that the industry had been adding over the past year.
"We are on a downward trajectory," said Carl R. Tannenbaum, an economic consultant in Chicago. "Firms are cutting back in expectation of difficult times."
Some economists think it likely that the negative job report will turn out to have overstated the weakness. In its August report, the Labor Department said there was a small decline in the number of jobs, but then revised that data to a gain the next month.
But the overall direction of the labor market is clear. In the past three months, the nation has averaged 41,700 new jobs per month; a year earlier, employers created 169,000 new jobs a month in the same span.
"This is perfectly consistent with all the other signals flashing that we're having a slowdown, if not a recession," said Jared Bernstein, a senior economist at the Economic Policy Institute in the District.
That could make for a tough year for U.S. consumers. Economists had been counting on continued employment and wage growth to sustain consumer spending. A weaker employment situation, when coupled with the weak housing market, could spell trouble.
"We rely on job creation and the wages that come with it for spending power," Tannenbaum said. "Without job creation and income growth, people will have to consume less."
There was some modestly positive news yesterday about the manufacturing sector. The monthly survey of purchasing managers, which reported that manufacturers were cutting back in December, moved into positive territory in January. The index by the Institute of Supply Management rose to 50.7, from 48.4. A number more than 50 indicates manufacturers are expanding; less than 50 means shrinking.
The stock market rose as the weak economic news was counteracted by Microsoft's bid for Yahoo and reports of a bailout of the second-largest bond insurer, Ambac Financial Group, by a consortium of banks. The Dow Jones industrial average rose 0.7 percent, and the Standard & Poor's 500 was up 1.22 percent.
Market participants have been nervously watching Ambac and its competitors, which have insured billions of dollars worth of complicated subprime mortgage securities. The value of those securities has plunged during the credit crisis.
Staff writers Michael Abramowitz in Kansas City, Mo., and Tomoeh Murakami Tse in New York contributed to this report.
