Payrolls Shrink, First Drop in 4-1/2 Years

WASHINGTON (Reuters) – U.S. employers unexpectedly cut 17,000non-farm jobs in January, the first time in nearly 4-1/2 years thatU.S. payrolls shrank as fading construction and manufacturing sectorsreflected the economy’s waning momentum.

The Labor Department report on Friday came in much weaker thananticipated by analysts surveyed by Reuters, who had forecast 80,000jobs would be added last month. The department revised December’snew-job total up to 82,000 from 18,000 but the hiring trend clearly wasfading as 2007 ended.

The last time that jobs were cut was in August 2003 when 42,000 were lost.

The national unemployment rate eased to 4.9 percent from 5 percentin December but the number of people in the civilian labor forcedeclined. The unemployment rate is calculated using a separate surveythan the one the department uses for measuring the number of payrolljobs added or subtracted each month.

Manufacturers cut 28,000 jobs in January, a 19th straight month ofcontraction for the sector, while the number of construction jobsdropped by 27,000. The department said construction industries haveshed 284,000 jobs since employment peaked in September 2006, largelyreflecting the continuing decline in home building.

After holding steady for six months, the average workweek fell to33.7 hours in January from 33.8 in December, another sign of potentialweakening in labor markets.

The private sector added 1,000 jobs in January but 18,000 government jobs were lost.

(Reporting by Glenn Somerville, editing by Neil Stempleman)

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