Friday, November 7, 2008
Unemployment rate leaps to 6.5%, 14-year high
WASHINGTON (MarketWatch) - The U.S. labor market has collapsed in the past three months, shedding 651,000 jobs and driving the unemployment rate to its highest point in more than 14 years, the Labor Department reported Friday.
U.S. nonfarm payrolls fell by 240,000 in October, worse than expected. Payrolls losses in September were revised down sharply to 284,000, the largest job loss in seven years.
Unemployment surged by 603,000 in October to 10.1 million, the highest level in 25 years, according to a survey of households. In the past six months, unemployment has leaped by 2.45 million, the largest increase since 1975.
"A stumbling economy seems to have been kicked down the stairs," said Lawrence Mishel, president of the Economic Policy Institute. "This is what a deep recession looks like."
So far in 2008, a total of 1.18 million jobs have been lost, according to the survey of work sites. Payrolls have fallen for 10 straight months. Read the full government report.
The last time the unemployment rate was as high as 6.5% was in March 1994. Most economists believe the jobless rate will probably rise to nearly 8% next year, territory last seen in the early 1980s.
"While the labor market is already in its worst condition since 2001, we expect it to weaken further," wrote Harm Bandholz, economist for UniCredit Markets.
Already, the jobless rate has risen by 1.5 percentage points over the past six months, the steepest climb since 1982.
The number of workers forced into part-time hours rose by 645,000 in October to 6.7 million.
An alternative gauge of unemployment -- which includes discouraged workers and those whose hours have been cut back to part-time -- rose to 11.8%, the highest in at least 15 years.
The October employment report was much worse than expected. Economists surveyed by MarketWatch thought the jobless rate would rise to 6.3% from 6.1% in September, and they expected job losses of around 210,000 in October. See Economic Calendar.
The discouraging report added to selling pressure on Wall Street, although stock indexes were higher after the two worst back-to-back days ever. Treasury prices fell while the dollar weakened. See full story.
Total hours worked in the economy fell 0.3% in October and are down 1.7% in the past year. The average workweek was steady at a record-low 33.6 hours.
Average hourly earnings rose 4 cents, or 0.2%, to $18.21.
Weak income growth implied by the report "will likely further depress already grim expectations for the holiday shopping season," wrote Richard Moody, chief economist for Mission Residential, who said his forecast for a 3% drop in fourth-quarter gross domestic product was too optimistic.
Job losses were deep and widespread across industries, according to the survey of work sites. Of 274 industries, only 37.6% were hiring in October, the lowest since June 2003. The brightest spot continued to be health-care, which added 26,000 jobs in October. Government added 23,000 jobs.
Goods-producing industries cut 132,000 jobs. In manufacturing, 90,000 jobs were lost, including 27,000 due to a strike at Boeing Co. Of 84 manufacturing industries, 27.4% were hiring.
Construction lost 49,000 jobs.
In the services, 108,000 jobs were lost, including 38,000 in retail, 24,000 in financial services and 51,000 in temporary-help jobs.
Rex Nutting is Washington bureau chief of MarketWatch.
Posted by JRohio at 8:02 AM