The United States lost almost 600,000 jobs last month and the unemployment rate rose to 7.6 per cent, its highest level in more than 16 years, the Labor Department said on Friday.

It was the biggest monthly job loss since the economy tipped into a recession more than a year ago, and it was even worse than most forecasters had been predicting.

In addition, the Government revised down its estimates for previous months by 4,00,000. For December, the Government revised the job loss to 5,77,000 compared with an initial reading of 5,24,000. Overall, it said, the nation has lost 3.6 million jobs since it slipped into a recession in December 2007.

“Businesses are panicked and fighting for survival and slashing their payrolls,” said Mark Zandi, chief economist at Moody’s Economy.com. “I think we’re trapped in a very adverse, self-reinforcing cycle. The downturn is intensifying, and likely to intensify further unless policy makers respond aggressively.”

As in previous months, employers in January slashed their payrolls in almost every industry except healthcare. Manufacturers eliminated 2,07,000 jobs, more than in any year since 1982. The construction industry eliminated 111,000 jobs. And retailers, who were wrapping up their worst holiday shopping season in years, eliminated 45,000 jobs.

One modest exception to the bad news was in workers’ wages, which have thus far not reflected the dramatic plunge in employment. Hour earnings edged up to $18.46, up five cents, and average weekly earnings climbed $614.72, up $1.67.

A bipartisan group of senators worked furiously in backroom negotiations on Thursday to cut the cost of the more than $920 billion economic stimulus plan. Senate Democratic leaders said they would await outcome of those talks before pushing for a final vote on the measure.

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Members of the bipartisan group, led by Senators Ben Nelson and Susan Collins, said they wanted to trim spending that would not quickly create jobs or encourage spending by consumers and businesses. They spent the day scrutinising the 736-page bill and wrangling over what to trim.

Aides said the group had drafted a list of nearly $90 billion in cuts, including $40 billion in aid for states, more than $14 billion for various education programmes, $4.1 billion to make federal buildings energy efficient and $1.5 billion for broadband Internet service in rural areas. But they remained short of a deal.

“We’re trying to focus it on spending that truly helps stimulate the economy,” Collins said. “People have different views on whether or not a programme meets that test. So we’re continuing to talk.”

Source – Indian Express