What was expected to be a bad unemployment report for November was indeed horrific. The Bureau of Labor Statistics (BLS) released its monthly Employment Situation Summary this morning and reported employment fell by 533,000 jobs last month.
Just days earlier varying estimates had predicted the number would come close to 300,000 so the sharp uptick demonstrates the intensity of a recession that is now expected to last well into 2010. Today’s
BLS report also puts additional pressure on the incoming Obama administration as Mr. Obama’s pledge to create 2.5 million jobs pales in comparison to the actual number needed to put the economy back on track. November’s drop follows job losses of 320,000 in October and 403,000 in September.
The news comes on the heels of announcements of layoffs by major companies, including AT &T (12,000), Dupont (2,500) and Credit Suisse (5,300). Unemployment now stands at 6.7 percent with the total unemployed at 10.3 million. As bad as the unemployment figure is for Americans, it only tells part of the problem. Many are in the grips of long term joblessness and their status as unemployed does not factor into the official rate because they have given up looking for work upon the belief that no jobs are available, hence they do not report through the formal unemployment system.
Since the start of the recession in December 2007 total nonfarm employment has dropped by 1.9 million jobs. However, two-thirds of those losses have occurred in the last three months. In November losses were in all of the major industries except health care. Manufacturing jobs declined by 85,000 positions last month with losses in metal products (15,000), machinery (11,000) and computer and electronic products (7,000) among the sectors. Since last December employment in manufacturing has declined by 604,000 jobs. Given the state of the American automobile industry, this sector will likely see significant losses for months to come. Last month employment in motor vehicle and parts manufacturing declined by 13,000 jobs.
Losses continued in construction, with employment declining by 82,000 in November. After a peak in September 2006 employment in construction has declined by 780,000. Specialty trade contractors, residential and non-residential, lost 50,000 jobs last month. The employment services industry also lost jobs last month, shedding 101,000 and within the industry employment in architectural and engineering services fell by 10,000.
One of the most ominous signs for the economy is that retail trade suffered losses at a time of the year that industry seeks to boost annual revenue through holiday sales. Employment in retail has fallen by 115,000 since December. As expected there were job losses in automobile dealerships (24,000) but also in clothing and accessory stores (18,000), furniture and home furnishing stores (10,000), and sporting goods, hobby, book and music stores (11,000). Employment in leisure and hospitality declined by 76,000 last month, an indication of the economy’s impact on consumers’ cash flow and reluctance to spend on nonessential items. Much of the loss in the industry was in accommodation and food services (54,000).
The financial services industry continued to get hammered. Job losses were in credit intermediation (16,000) and in rental and leasing services (9,000). The total decline in the industry since December is now 142,000. The lone bright spot in the November Employment Situation Summary was in health care, picking up 34,000 jobs for the month. While the job gains were certainly a move in a positive direction, the reason for the need for hiring in the industry may not. In the absence of universal health care, the demand for health care services is a troubling side of the public’s state of wellness.
