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U.S. Companies Slashed 101,000 Jobs in December

The already troubled U.S. labor market took a turn for the worse in December as a dismal holiday retail season cost over 101,000 jobs to the economy -- in sharp contrast to expectations that the total payroll would rise, the government said on Friday.

The jobs drop was the largest since February, when the economy lost 165,000 jobs. For 2002 as a whole, the economy shed a net 181,000 jobs.

The job cuts last month were widespread and followed a revised loss of 88,000 in November, the Labor Department said Friday.

Despite the steep drop in payrolls, the unemployment rate stayed steady last month at 6 percent -- an eight-year high. The report is based on two separate surveys, which can sometimes provide a confusing or conflicting snapshot of the health of the U.S. job market. The 6 percent rate is calculated from a government survey of households. Payroll numbers are determined from a separate survey of businesses.

The number of people unemployed 15 weeks or more climbed to 3.2 million in December.

U.S. bond prices soared on the report and the dollar sank to a three-year low against the euro.

"It's weaker than expected and I think the only sign of strength was manufacturing hours were up and overtime was up. Other than that it's a very soft report, and the previous month was revised down," said Asha Bangalore, economist at Northern Trust Co. in Chicago.

Meanwhile, the White House said Friday that President Bush was "very concerned" about U.S. job losses.

"The president remains very concerned about the potential for a jobless recovery and this is why he calls on Congress to act as quickly as Congress can to pass his job creating initiative," White House spokesman Ari Fleischer said.

"The president views this morning's data as another reason for Democrats and Republicans to work together to get something done," Fleischer added.

The nation's retailers, which typically boost payrolls in December to handle the crunch of the holiday shopping season, shed 104,000 jobs. Factories slashed 65,000 jobs to end the year, and payrolls were down 592,000 positions from the previous year.

The struggling airline industry drove job losses in the transportation industry, which hemorrhaged 23,000 jobs last month.

The ailing economy has shown no consistent signs of a strong recovery. In fact, economists are bracing jobseekers for more bad news in the months ahead.

Facing the potential political damage, Bush and a new Republican-controlled Congress quickly pushed through a federal extension of emergency unemployment benefits this week as lawmakers returned for a new session.

Bush also announced his plan to create "re-employment accounts" of up to $3,000 for jobless workers. The $3.6 billion program would help people pay for expenses such as child care, job training, transportation and moving expenses while looking for work.

With economists predicting only modest economic growth in the months ahead, the jobless rate could rise to 6.5 percent by the summer, analysts have said.

The holiday season turned out even worse than expected for most of the nation's retailers. Analysts and retailers attributed the weaker-than-expected performance to fewer shopping days, economic uncertainty and consumers' lack of must-buy items.

About the only bright spot in retail was furniture and home furnishings stores, which added 14,000 jobs last month. Consumers have taken advantage of the lowest interest rates in four decades to buy homes and refinance their mortgages, driving up spending on household items.

Reuters and the Associated Press contributed to this report.