U.S. companies slashed more jobs in February and the unemployment rate has increased, signifying that the labor market is still fighting to recover, economists said before a Government report this week.

After creating 64,000 jobs in November, the first monthly rise in approximately two years, payroll declined in December and January.

“Even leaving aside the effects of inclement weather, the economy still appears to be shedding jobs”, said Aaron Smith, a Senior Economist at Moody’s Economy.com in West Chester, Pennsylvania.

The economy is running with a shortage of around 8.4 million jobs since the recession started in December 2007, the biggest downturn in the postwar era.

For the first time, the unemployment rate might rise since October. The rate is estimate at 9.5% this year, median estimate of economists surveyed showed this month.

Americans increased their spending by 0.4%, from 0.2% in December, revealed economists before a report tomorrow from the Commerce Department.