Source: Reuters

WASHINGTON (Reuters) – Job losses in the United States likely accelerated last month and the unemployment rate probably surged to a 25-year high as recession-hit companies took drastic steps to cut costs, according to economists.

They reckon that the U.S. economy, reeling from the worst financial crisis since the 1930s and stuck in recession since December 2007, will continue to bleed jobs well into the second half of next year, even as overall output begins to recover.

The Labor Department is scheduled to release its February non-farm payrolls report on Friday at 8:30 a.m.

A poll of 78 economists by Reuters produced a median forecast that employers outside the farm sector slashed 648,000 jobs in February after cutting 598,000 positions in January. Forecasts for February ranged from a loss of 800,000 jobs to a drop of 500,000.

Manufacturing payrolls were estimated to have shrunk by 195,000.

The survey predicted the unemployment rate would rise to 7.9 percent, which would be the highest level since January 1984. The U.S. jobless rate was 7.6 percent in January.

“All the leading labor market indicators are pointing to a pretty sharp decline. Economic activity is declining at a pretty rapid rate, similar to what we saw in the fourth quarter of last year,” said Bob DiClemente, chief economist at Citigroup in New York.

In the final three months of last year, the economy shrank at an annual rate of 6.2 percent, its sharpest contraction since the first quarter of 1982.

“Companies are acting to reduce costs to protect themselves as the level of business activity declines and that has meant large widespread job losses. It’s symptomatic of a very, very severe recession,” DiClemente said.

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