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Job cuts increased by 20 percent in February

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Employers announced more job cuts in February than in the same month last year, led by a surge at government agencies.

Nationwide, planned firings increased 20 percent to 50,702 last month from February 2010, the first year-over-year rise since May 2009, according to a report from Chicago-based Challenger, Gray & Christmas Inc. Announcements at federal, state and local government offices almost tripled from last year. Iowa had among the fewest job cuts, 199, according to the report.

“More job cuts at the federal level are expected in the months ahead as pressure mounts to cut costs and rein in the soaring national debt,” John Challenger, the outplacement company’s CEO, said in a statement.

Dismissals of government workers may contribute to a slowdown in consumer spending, which accounts for 70 percent of the economy. Combined with the highest gasoline prices in two years, the threat of a pause in purchases may already be causing retailers, which had the second-biggest number of announcements last month, to pare payrolls, said Challenger.

“If gasoline tops $4 per gallon in the coming weeks, consumers may be forced to make significant changes to their spending habits,” he said. “At this stage of the recovery, that could be an extremely damaging setback.”

Compared with last month, which saw the fewest firings for any January since record-keeping began in 1993, job-cut announcements climbed 32 percent. Because the figures aren’t adjusted for seasonal effects, economists prefer to focus on year-over-year changes rather than monthly numbers.