Half a million jobs lost in the states in November

[RedRalph]

from guardian

The US economy is losing jobs at its fastest rate in 34 years after 533,000 people were axed last month.

The shock figures for November far exceeded economists' most pessimistic estimates and sent share prices into a sharp retreat. The FTSE 100 index swiftly doubled its 50 point loss after the news. Wall Street is expected to open sharply lower when trading begins later today.

The November jobless data brings the unemployment rate up from 6.5% in October to 6.7%.

Nigel Gault, the chief US economist at forecasting firm IHS Global Insight, said the economy was now destined for its worst recession since the second world war. "These are just absolutely disastrous numbers," he said.

Gault said the Labor Department announcement increased the pressure on the president-elect, Barack Obama, to introduce a significant economic stimulus package. Some experts have called for an injection of at least $700bn (£380bn) into the US economy and Obama has pledged to create 2.5m new jobs over his first two years in office.

"We need to get something up and running as quickly as possible. It is very unfortunate that the economy is going into freefall at the same time that we are in between administrations. We have a period of policy paralysis," said Gault.

Today's announcement brings the jobless total to 10.3 million people out of a total workforce of about 140 million. IHS Global Insight expects the unemployment rate to reach 8.7% to 9.8% next year, which could bring the jobless total to about 15 million.

It also points to a severe contraction in the world's largest economy in the final quarter of this year, with many forecasts indicating a decline in gross domestic product of 4% following a fall of 0.5% in the previous three months. The US economy tipped into recession in December last year, a panel of experts declared earlier this week.

The service sector suffered the heaviest job losses, shedding 370,000 posts. Within that total, retailers axed 91,000 jobs and professional and business services, which includes the financial sector, shed 136,000 people. The goods producing industries lost 163,000 jobs with 82,000 going in construction and 85,000 in manufacturing.

The bleakest forecasts had predicted job losses of up to 500,000. Today's number is the worst since December 1974, when 602,000 people lost their jobs.

The figures for September and October also saw sharp upward revisions, meaning almost 200,000 more jobs were lost than had initially been thought. The original estimates were 284,000 in September and 240,000 in October; those have been revised upwards to 403,000 and 320,000 respectively.

The news comes a day after retailers confirmed that consumer spending was in full-scale retreat with major stores announcing November sales declines of more than 10%.

Retailers traditionally hire more workers for the peak shopping season but the November sales figure indicates that December could be a dire month for jobs, as well.

Firms in all sectors of the US economy are shedding jobs. Yesterday saw AT&T, the telecoms giant, announce the axing of 12,000 jobs while DuPont, the chemicals group, let go 2,500 people and media giant Viacom announced the departure of 850 employees. Today's news is expected to trigger a bad day on the US stockmarkets.

The jobless rate in the 1980-1982 recession peaked at 10.8%, the worst since the Great Depression. The current US recession is expected to match its post-war predecessors in terms of length. According to the National Bureau of Economic Research, which called a recession this week, the downturn is 12 months old and needs to last five more months to outrank the 1973-1975 and 1980-1982 recessions.

Ouch. And it seems to be only getting worse.

 

[Mise]

BBC link: http://news.bbc.co.uk/1/hi/business/7767326.stm

IMO this just means there will be fewer job losses than expected next month... I.e. companies just axed staff sooner rather than later, which makes financial sense (you start saving money sooner). But we'll see...

 

[RedRalph]

BBC link: http://news.bbc.co.uk/1/hi/business/7767326.stm

IMO this just means there will be fewer job losses than expected next month... I.e. companies just axed staff sooner rather than later, which makes financial sense (you start saving money sooner). But we'll see...

I dont know.... with such a bad Xmas for the shops likely, Dec could be the peak

 

[MobBoss]

Actually, I thought Black Friday came off better than expected, didnt it?

 

[Mise]

I dont know.... with such a bad Xmas for the shops likely, Dec could be the peak

Well Dec might be worse than Nov, but still better than expected. :shrug: I have no idea, but it wouldn't surprise me if some of the layoffs expected in Dec were moved forward to Nov.

 

[RedRalph]

Actually, I thought Black Friday came off better than expected, didnt it?

Well, yeah, thats true. But it dosent follow Xmas will be good. In any case if one of the car companies collapses then figures will go up regardless of how good or bad Xmas is.

 

[nc-1701]

Actually, I thought Black Friday came off better than expected, didnt it?

Yeah, but it's the only one. Basically from what I understand the sales went well, but nobody bought anything for the rest of the month.

 

[JerichoHill]

I believe Mise is right with his expectations about the job losses.

We not near the apex of what we expect the unemployment rate to get to right now. We (economists) are expecting 8%ish at a peak. That would be post-holiday cuts.

So if I'm a betting man, every TV analyst is shocked in January when December pulls in a "good" month (ie, better than expectations), and then the opposite in February.

 

[RedRalph]

I believe Mise is right with his expectations about the job losses.

We not near the apex of what we expect the unemployment rate to get to right now. We (economists) are expecting 8%ish at a peak. That would be post-holiday cuts.

So if I'm a betting man, every TV analyst is shocked in January when December pulls in a "good" month (ie, better than expectations), and then the opposite in February.

Even if one or all of the car companies collapse?

 

[JollyRoger]

The Obama recession continues.

 

[JerichoHill]

Even if one or all of the car companies collapse?

First, bankruptcy does not mean "collapse". Many airlines went bankrupt in the 80s and they continued to operate until they came out of bankruptcy. The auto executives are overplaying the consequences because its in their interest. I expect GM and Chevy to enter bankruptcy anyways.

I'm guessing at the mid 8s.

 

[JerichoHill]

The Obama recession continues.

Priceless

Yes, surely its the fault of the guy who isn't even taking office for another month

 

[Steph]

What? The USA will soon have an unemployement rate as high as France?

 

[JollyRoger]

Priceless

Yes, surely its the fault of the guy who isn't even taking office for another month

You may be right. It's probably all a carryover from the Clinton years.

 

[MobBoss]

This is simply just a small part of the euro-ification of the USA. Its obviously our attempt at mirroriing EU unemployment rates.

 

[DNK]

http://economix.blogs.nytimes.com/2008/12/05/workers-give-up/?hp
Quotes:

According to the Labor Department, the number of unemployed workers rose by 251,000 in November. But the number of people who were outside of the labor force — that is, neither working nor looking for work — rose by much more: 637,000. These people aren’t counted as unemployed in the government’s statistics, because they are not looking for work.

The share of all men ages 16 and over who are working is now at its lowest level since the government began keeping statistics in the 1940s.
[my own research suggests that it's actually since the mid-70s, but still...]

The number of people working a part-time job because they couldn’t find a full-time job rose by 621,000 last month. These people count as employed, but obviously many of them are struggling.

If there is one silver lining in the report, it’s that [real] pay hasn’t fallen more sharply.

From the BLS report:

In November, the labor force participation rate declined by 0.3 percentage point to 65.8 percent.
Total employment continued to decline, and the employment-population ratio fell to 61.4 percent.

Over the month, the number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) continued to increase, reaching 7.3 million. The number of such workers rose by 2.8 million over the past 12 months.

In November, the average workweek for production and nonsupervisory workers on private nonfarm payrolls fell by 0.1 hour to 33.5 hours, seasonally adjusted—the lowest in the history of the series, which began in 1964.

So, if we look at employment numbers as significant in that they tell us about unutilized productive potential of the possible workforce, we see a very disconcerting picture, one significantly worse than the simple "unemployment rate" would suggest.

 

[emzie]

What? The USA will soon have an unemployement rate as high as France?

Well both countries define unemployment differnetly

For the fourth quarter of 2004 ...unemployment for men aged 25 to 54 was 4.6% in the USA and 7.4% in France. At the same time and for the same population the employment rate (number of workers divided by population) was 86.3% in the U.S. and 86.7% in France.

http://en.wikipedia.org/wiki/Unemployment#Limitations_of_the_unemployment_definition

 

[DNK]

Well both countries define unemployment differnetly



http://en.wikipedia.org/wiki/Unemployment#Limitations_of_the_unemployment_definition

Slightly old figures, don't you suppose?

Still, what's interesting is that the US works almost 27% more hours/wk than in France despite very similar participation rates. Not surprising, of course, given the 35 hour work week there.

 

[emzie]

Slightly old figures, don't you suppose?

Still, what's interesting is that the US works almost 27% more hours/wk than in France despite very similar participation rates. Not surprising, of course, given the 35 hour work week there.

... and the 6 weeks of vacation a year. I have to admire that. I would gladly take a pay cut for such benefits.

 

[Mowque]

well my girlfriend lost her job, and my hours got cut..you know the saying. unemployment is either 100% or 0%, you have a job or not.