Any hopes that the economy can avoid a full-blown recession have been dashed by a report that shows a crippled labor market.

American employers eliminated 63,000 jobs in February, the deepest cut in five years. The data was much weaker than economists had been expecting, and showed how much the slump in the housing market and a tight credit market have dragged down the overall economy.

The Department of Labor also revised January's loss of 17,000 jobs, to 22,000, and lowered December's gain to 41,000 jobs from the 82,000 that was originally reported.

It was the first back-to-back monthly declines since 2003.

The Bespoke Investment Group notes that since 1960, "every back-to-back reading of negative jobs numbers has coincided with a recession."

The job cuts in February were felt in a broad swath of industries. Manufacturing lost 52,000 jobs and construction cut 39,000 jobs. The only hiring gains were in government, health and education, and hospitality.

Few inflationary pressures were evident in the data. Average hourly earnings rose by 5 cents, or 0.3 percent, over the month.

The unemployment rate, which is calculated using a different survey than that for payrolls, slipped to 4.8 percent, from 4.9 percent in January.

Still, the Calculated Risk blog says, "although unemployment was slightly lower—as people leave the workforce—the rise in unemployment, from a cycle low of 4.4 percent to 4.8 percent is a recession warning."