The decline last month underscores the effect the housing and lending crisis is having on US firms, which were forced to cut 22,000 jobs in January.

The biggest employment declines were seen in the manufacturing, construction and retail sectors.

Those areas of the economy have been hardest hit by the slowdown.

The figures also showed the unemployment rate fell to 4.8% from 4.9%, when analysts had been expecting a rise to 5%.

The fall came as a result of people giving up on looking for a job, discouraged by their prospects.