Payrolls fell by 17,000 after an 82,000 gain in December that was larger than initially reported, the Labor Department said today in Washington. The jobless rate declined to 4.9 percent from 5 percent in December.
The drop in payrolls, in the wake of tighter credit, a deeper housing slump and a stumbling stock market, is the clearest sign yet that the U.S. expansion is at risk. Payrolls are one of the indicators, along with wages, production and sales, that help determine the start of economic contractions.
Odds of a half-point cut in the Fed's benchmark rate by the March 18 meeting rose to 82 percent from 68 percent late yesterday, futures showed.
Service industries, which include banks, insurance companies, restaurants and retailers, added 34,000 workers last month after an increase of 143,000 jobs in December. Retail payrolls climbed by 11,200 after a decline of 12,000 in December.
Factory payrolls dropped by 28,000 after falling 20,000 a month earlier. Economists had forecast a drop of 20,000 in manufacturing employment. Builders trimmed payrolls by 27,000 in January.
Government payrolls shrank by 18,000 during January, the first decline in six months, after rising 28,000 in December.