U.S. employers cut 598,000 jobs in January

The U.S. economy lost 598,000 jobs last month — the biggest one-month drop since 1974 — as the jobless rate climbed to 7.6 per cent.

The job losses for January were above the estimate of economists, who had been forecasting a drop in employment in a range between 525,000 and 540,000.

The unemployment rate in the U.S. now stands at its highest level since September 1992. In December, the jobless rate was 7.2 per cent.

The U.S. economy has now lost about 3.6 million jobs since the current recession began in December 2007, with the bulk of the losses coming in the past three months.

The bleak job numbers add to the pressure on new U.S. President Barack Obama and Congress to come up with a stimulus package to bolster the economy.

In some of his most pointed comments to date on the economy, Obama called on Congress to pass his stimulus package. He said it was "inexcusable and irresponsible" to continue to delay passage of the package.

"These Americans are counting on us, all of us in Washington. We have to remember that we're here to work for them," Obama said. "If we drag our feet and fail to act, this crisis will turn into a catastrophe. We'll continue to get devastating job reports like today's month after month, year after year."

Indeed, many economists are projecting more bad job news in the months ahead.

"[The January unemployment figure] is an extension of the trend that obviously shows that things aren't improving, and we don't expect them to," TD Bank economist Derek Burleton told CBC News.

"Employment will be the last thing to pick up after the economy generally picks up," he said.

Hard-hit sectors

U.S. factory employment fell In January by 207,000 — the biggest one-month decline since October 1982.  Construction sector payrolls dropped by 111,000, while companies in professional and business services eliminated 121,000. Retailers cut 45,000, while 28,000 jobs were eliminated in the leisure and hospitality sector.

All those cuts overwhelmed job growth in education, health services and government.

Economists indicate that the situation could be very bleak for February as well.

"Recent sharp increases in layoff announcements and jobless claims flag another half-million drop in February payrolls," said BMO Capital Markets economist Sal Guatieri.

"According to one relevant study, job losses do not even peak until one to two quarters after the worst quarter for real GDP growth," said Meny Grauman of CIBC World Markets. "In this down cycle, that quarter looks like it may now be the current quarter, suggesting that the jobs numbers might even turn out to be uglier this coming spring."

Grauman said U.S. unemployment is expected to top nine per cent by the end of the year, and not show any significant improvement until well into 2010.