U.S. Economy Slashes 308,000 Jobs, Unemployment at 5.8 Percent

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The nation's unemployment rate increased to 5.8 percent in February and companies across the economy slashed 308,000 jobs — the steepest one-month slide since labor markets hit a slump in the wake of the 2001 terrorist attacks.

The overall civilian jobless edged up a tenth of a percentage point from the 5.7 percent figure recorded in January, the Labor Department reported Friday.

Economists had predicted the modest rise, but did not expect the hemorrhaging of jobs that wiped out large hiring gains the month before. Analysts actually had forecast job gains of 20,000.

Instead, employers last month shed the most jobs since November 2001, when they purged 327,000 from their payrolls following the attacks on the World Trade Center and Pentagon.

Nearly 2 million jobs have been lost since hiring peaked in March 2001.

In February alone, 8.5 million people were unemployed, a 2.8 million increase since the fall of 2000. The number of long-term jobless tripled during this period. About 1.9 million people have been jobless for 27 weeks or more, comprising 22 percent of total unemployment.

Businesses have been wary of making long-term hiring and spending commitments as the economy struggled toward recovery. But any improvements in the jobs market now appear to be quashed as the nation inches toward war with Iraq.

It was that same climate of uncertainty that dampened business confidence in the wake of the Sept. 11 terrorist attacks — and which soured job prospects for the unemployed.

Job losses in February were widespread. The nation's factories were hit particularly hard last month, which was not unexpected. Manufacturing employment has been obliterated since April 1998 and some 2.5 million jobs have been lost — most of them since the recession started in March 2001.

A sharp in construction employment wiped out gains in January. Since the recession began, construction jobs have been cut by 3.8 percent, substantially less than in other industries.

Employment in services fell by 86,000 last month, the largest monthly job loss since the fall of 2001. In that category, stores, restaurants and bars accounted for most of the decline. Hiring in amusement and recreation services, and at hotels and lodging places, all fell considerably short of their normal February levels.

The health care industry, one where growth has been consistent, again added jobs last month, although the increase was the smallest since 1999.

Hiring also continued in mortgage banking, which has added 122,000 jobs since January 2001. That reflects a mortgage refinancing spree and general strength in the housing market — one of the few bright spots in the economy.

Mortgage rates dropped to a new low this week, spurred by falling rates in the Treasury bond market. Investors worried about war are seeking safer investments in bonds.