U.S. payrolls contract by 17,000 in January

WASHINGTON (MarketWatch) -- Perhaps providing the smoking gun indicating that the nation's economy has entered a recession, government data released Friday showed a net reduction in U.S. nonfarm payrolls for the first time in more than four years.
As employers cut back their hiring, nonfarm payrolls fell by an estimated 17,000 in January, the Labor Department said. This is the first decline since August 2003. Read government report.
The nation's unemployment rate also fell, trending down to 4.9% from 5%.
The decline in payrolls came in stark contrast to the increase of 85,000 jobs that had been expected by Wall Street economists surveyed by MarketWatch. See Economic Calendar.
On Wall Street, stocks struggled to stay in positive territory, as the jobs report and Microsoft Corp.'s blockbuster acquisition bid for Yahoo Inc. competed for the market's attention. Read Market Snapshot.
In bonds, Treasury prices rose on new signs of economic weakness. See full story.

Initial claims for state unemployment benefits rose 69,000 in the week ended Jan. 26, reaching 375,000, the Labor Department reported Thursday. It marked the highest level since early October -- and the biggest weekly jump since September 2005 in the wake of Hurricane Katrina. Read government release.

The 24 states holding primaries in next week's Super Tuesday have lost 1,568,600 manufacturing jobs in the seven years since President Bush took office, according to statistics provided WND by the Alliance for American Manufacturing, or AAM.