WASHINGTON In a shower of pink slips, U.S. employers cut jobs last month for the first time in more than four years, the starkest signal yet that the economy is grinding to a halt, if it hasn’t already toppled into recession.
Conditions are deteriorating, according to the most up-to-date employment snapshot by the Labor Department, which showed nervous employers slicing payrolls by 17,000. The country hasn’t seen such a nationwide job loss since 2003, when employers were still struggling to recover from the last previous recession.
“We are certainly on thin ice,” said John Silvia, chief economist at Wachovia. Even President Bush, normally a cheerleader for the economy, said there were “serious signs” the economy was weakening.
Wall Street, however, took the news in stride. The Dow Jones industrial average on Friday rose 92.83, or 0.73 percent, to 12,743.19.
Meanwhile, Utah’s business conditions for the next few months looks a bit rosier than before, based on a report released Friday. A monthly business-conditions index for the state rebounded to 54.2 in January after slipping to 50.0 in November and slight growth to 51.2 in December. A figure above 50 indicates an expansionary economy over the next three to six months.
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Job losses nationally were widespread in January. Factories, construction companies, mortgage brokers and real-estate firms were among those eliminating jobs casualties of the housing bust and credit crunch. The government cut jobs for the first time since last July.
All those cuts swamped job gains in education, health care, retailing and elsewhere.
The unemployment rate dipped slightly to 4.9 percent, from 5 percent in December, as people left the labor force.
“Discouraged by a sluggish job market, many more adults are sitting on the sidelines,” said Peter Morici, an economist and business professor at the University of Maryland.
Wage growth also slowed, another indication of belt-tightening. Smaller wage gains could make people who still have jobs already squeezed by high energy prices reluctant to spend, further hurting the economy.
President Bush prodded Congress anew to quickly pass an economic rescue package.
“There’s serious signs that… the economy is weakening and that we’ve got to do something about it,” Bush said. On Capitol Hill, Democratic and Republican supporters of a stimulus package including tax rebates for people and tax breaks for businesses agreed the gloomy employment report underscored a need for urgency. The package is pending in the Senate, where there are disputes over attempts to expand it.
To help ease the credit crisis, the Federal Reserve announced it would provide cash-strapped banks with an additional $60 billion in short-term loans through auctions later this month. The Fed started the auctions in December and has already provided $100 billion in loans to banks.
With fears of recession growing, the Fed has gotten much more aggressive ordering two big interest rate reductions in just over a week.
The health of the nation’s job market is a critical factor shaping how the overall economy fares. If companies continue to cut back on hiring and put a lid on wages, that will spell more trouble.
The economy nearly stalled in the final three months of last year, and some economists believe it may actually be shrinking now.
Under one rough rule, the economy would have to contract for six months for the country to be considered in a recession. The likelihood of a recession has risen sharply over the past year, and analysts increasingly believe the United States will be in one during the first half of 2008.
The Utah business-conditions index released Friday is based on a survey of supply managers and business leaders and compiled by Creighton University. The index uses a range between zero and 100. The survey methodology is the same as that of a national survey by the Institute for Supply Management.
The institute said Friday that the national index, after slipping to its lowest level in almost five years, rose last month to 50.7, up from a revised reading of 48.4 in December.
Components of the Utah index for January were new orders at 54.3, production at 62.5, delivery lead time at 50.0, inventories at 41.4 and employment at 53.2.
“Over the past 12 months, the Utah economy has added almost 50,000 jobs, for growth of over 4 percent,” said Ernie Goss, a Creighton economics professor and director of the university’s Economic Forecasting Group. “This rate of growth will not be sustained for 2008.”
Goss said in a statement that he expects the growth rate for the first half of 2008 to decline to less than half that of 2007. Durable goods manufacturers, especially those with significant export sales, will be a leader for the first half of 2008, he said.
“There is scant evidence that the downturn in the national economy is spilling over into the Mountain States economy,” he said.
E-mail: bwallace@desnews.com
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