(Xinhua)
Updated: 2008-02-02 00:15

WASHINGTON -- US employers cut their payrolls by 17,000 in January, the first job reduction since August 2003, as fears of a recession have grown, the Labor Department reported Friday.

The weak showing defied economists who had been expecting an increase of about 70,000 jobs in payrolls.

The nation's unemployment rate, however, edged down to 4.9 percent from December's 5 percent as the civilian labor force shrank slightly because people left the labor force for any number of reasons.

Economists were predicting the unemployment rate would stay at 5 percent.

The report showed that government employers cut 18,000 positions in January, while private employers added just 1,000 jobs. Employment in construction and manufacturing declined, while job growth continued in health care.

Last December the economy added 82,000 jobs, far more than the 18,000 estimated previously.

Last year, the economy added an average of 95,000 jobs per month, down sharply from the pace of 175,000 a month in 2006, the report also showed.

Wages grew at a slower pace in January.

Workers' average hourly earnings rose by 0.2 percent to 17.75 USdollars. The gain was smaller than the 0.3 percent rise expected by economists. Over the last 12 months, wages increased 3.7 percent.

The jobs cut in January was seen as a sign that the tightening credit stemming from the troubles in the high-risk subprime mortgage market, which offers loans to people with lower credit and income, is putting a strain on overall economic activity.