Jobless rate jumps to 8.1% as 651,000 jobs slashed

WASHINGTON -- U.S. businesses slashed 651,000 jobs in February, pushing the unemployment rate to a 25-year high of 8.1%, the Labor Department said Friday. Job loss was widespread as the deepest, longest recession in decades affected a broad swath of industries from construction to trucking to hotels.

While the February numbers were in line with analysts' projections, the Labor Department said job losses in previous months were sharply higher than previously reported, with business payrolls down another 161,000 in December and January.

Overall, companies have shed about 4.4 million jobs since the recession started in December 2007, with more than half the job loss coming in the past four months. The unemployment rate, 7.6% in October, has spiked by 3.3 percentage points in the past 12 months.

"We are staring into the abyss," says Steven Wood of Insight Economics. "The recession is intensifying and the economy is rapidly shrinking."

Calling the latest job losses astounding, President Obama promised Friday to get Americans back to work.

Obama spoke at the graduation ceremony for 25 police recruits who owe their jobs to the $787 billion economic recovery bill he signed into law less than three weeks ago.

In a 12-minute speech, the president noted that 651,000 U.S. jobs were lost last month, bringing to "an astounding 4.4 million" the number lost in the current recession. The Columbus police recruits were about to join those ranks, he said, "a future that millions of Americans still face right now."

"Well, that is not a future I accept for the United States of America," Obama said. That's why he signed the stimulus bill that Congress passed last month with minuscule help from Republicans, he said.

The Obama administration has pushed a series of radical steps to bolster the economy. Obama recently signed the $787 economic stimulus bill designed to save 3.5 million jobs, and this week unveiled the details of a plan to restructure mortgages for millions of homeowners. The Fed and the Treasury Department this week initiated a program to spur up to $1 trillion in small business and consumer lending on autos, student loans and other products.

But the administration has yet to come up with a workable solution for shoring up the nation's largest banks, which has pushed their stock prices into the basement. General Motors' gm auditors this week issued a report making it clear that the auto giant may not be able to avoid bankruptcy. Big name companies like Sears shld and General Electric ge have run into difficulty.

Lawmakers, labor and industry leaders are starting to call for more aggressive action as the economy craters. Noting that unemployment in the construction industry is now 21.4% the Laborers' International Union of North America said the stimulus bill was only a first start, and that hundreds of thousands of workers would still be without jobs even if it met its employment goals.

"The construction industry is in a near depression," says LIUNA General President Terry O'Sullivan.

As has been the case for months, the construction and manufacturing industries were battered in February. Professional and business services also recorded large job losses, as did media, trucking, retail and hospitality. The health care sector was one of the few bright spots, adding 27,000 workers during the month.

The top line numbers tell only part of the story, however, The number of long-term unemployed, those out of work for six months or more, rose by 270,000 to 2.9 million in February, and has increased by 1.6 million in the past year. The slice of people working part time for economic reasons jumped 787,000, to 8.6 million, and has increased by 3.7 million in the past year.

Richard Moody, chief economist of Mission Residential, noted that the Labor Department's broader measure of underemployment in the economy rose to 14.8%, due to the sharp rise in the number of people working part time for economic reasons.

"Combing the details of the employment report offers little hope of improvement any time soon," Moody said, adding that the number of hours worked also dropped sharply in February. He predicted the economy was currently contracting even more dramatically than during the final months of 2008.

About 2 million people were marginally attached to the labor force in February, meaning they wanted to work and had been looking for work in the past year, but weren't counted as unemployed because they hadn't been job hunting in the past month

The unemployment rate for men was 8.1% in February, while the female jobless rate was 6.7%. There were big differences among racial groups, with the white unemployment rate at 7.3%, the black jobless rate at 13.4% and Hispanic unemployment jumping to 10.9%.

Professional and business service employment fell by 180,000 during February, with the temporary help sector losing 78,000 jobs. Architectural and engineering firms, business support centers and related companies took a hit.

The manufacturing sector lost another 168,000 jobs in February, mostly in plants that produce long-lasting durable goods, including metal products and machinery. Construction payrolls fell by 104,000 jobs, and are down by 1.1 million from the peak in January 2007. About 40% of construction job loss has taken place in the past four months, with reductions at both homebuilders and firms involved in commercial construction.

The trucking industry also took a blow, with a 33,000 job reduction in February. With less freight to move as demand wanes, the trucking sector has lost 138,000 jobs since December 2007 and 88,000 in just the past for months.

The information industry, including media, lost 15,000 jobs. Employment has plunged by 76,000 since October, with about 40% of the drop in publishing.

The financial sector lost 44,000 jobs for total losses of 448,000 since its peak in December 2006.