The economy unexpectedly shed 63,000 jobs in February, the government said on Friday, fueling fears of a recession as manufacturers and construction companies cut their work forces amid the continuing housing crisis.It was the fastest fall-off in the labor market in five years, and the report raised anticipation on Wall Street that the Federal Reserve will lower interest rates again later this month. Some investors are now predicting a more drastic cut of a full percentage point. Before the jobs report was released, the Fed announced that it would increase the amount of money available through the new auction program it has put into place for banks, in a move to ease the flow of credit between banks, businesses, and consumers. The Fed will release $100 billion in additional capital, as part of its effort to make it easier for banks to borrow money from the government without the traditional stigma.“I haven’t seen a job report this recessionary since the last recession,” said Jared Bernstein, an economist at the Economic Policy Institute in Washington. “This is a picture of a labor market becoming clearly infected by the contagion from the rest of the economy.” Many economists had predicted a slight increase; instead, February marked the second straight monthly decline in the labor market. The government also revised down its estimate for January to a loss of 22,000 jobs — the first decline in four years — and cut in half its estimate for job growth in December. The private sector lost 101,000 jobs last month, the biggest drop-off in five years. Retail, construction and factory jobs were hit hardest.Fewer Americans looked for work in February, a sign of increasing discouragement among the nation’s work force. The drop-off sent the unemployment rate down to 4.8 per cent last month from 4.9 per cent in January. Wages grew more slowly, further depressing the outlook for consumer spending over the next few months. Among rank-and-file workers — more than 80 percent of the work force — average pay grew just 0.3 percent to $17.20 an hour. Wages are effectively running flat when adjusted for inflation.
